Mr. Stewart's article links directly to two of the lines of enquiry of CCAF's Accountability and Audit program: the accountability and audit practices of legislature committees, and the accountability linkages between Crown Corporations and their Boards of Directors. It also demonstrates the use of reporting principles similar to those CCAF has developed, in a real-world setting.

We are indebted to him for sharing his knowledge and experience with CCAF members, both through his work on the Advisory Committee and in this article.

Ken Stewart was first elected to the British Columbia (B.C.) legislature in 2001. He is a member of the caucus of the British Columbia Liberal Party. In addition to his responsibilities as Chair of the Select Committee on Crown Corporations, he is a member of the Government Caucus Committee on the Economy and Government Operations. Before becoming a MLA, he owned and operated Coniagas Ranches Limited. On the historic family farm in Maple Ridge, Ken pioneered the B.C. deer farm industry in 1987. From 1974 to 1984, Ken worked for the Ministry of the Attorney General before moving into the private sector where he was general manager of a new company involved in the transition of government services to the private sector. In 1996, Mr. Stewart was elected to the municipal council for the District of Maple Ridge. Ken has had extensive involvement as a leader in a wide range of community activities.

B.C.'s EXPERIENCE WITH REPORTING PRINCIPLES

Let me start by providing some context for the use of reporting principles by the Select Standing Committee on Crown Corporations. The Liberal government of which I am a member came into office in 2001 having committed to the people of British Columbia that we would strengthen accuracy and transparency in reporting on our progress as a government. We enacted the Budget Transparency and Accountability Act, which requires the government to fully implement generally accepted accounting principles, and the Balanced Budget and Ministerial Accountability Act, which required the government to balance the budget by 2004-05 and prohibits a deficit in any year thereafter.

With respect to ministerial accountability, the latter act puts the onus on both the executive council and individual ministers to deliver upon the budgetary and performance targets. Twenty percent of a minister's salary is held back each year. One-half of the withheld salary for the executive council may be returned if the government collectively meets its financial target for the budget year. The remaining 50 percent may be returned to individual ministers if they maintain expected operating expenses, meet or exceed revenue targets and meet specific goals or objectives.

The act forces ministers to set and achieve realistic fiscal and performance targets, thereby creating an additional mechanism to ensure budgets are balanced. The idea is to move reporting beyond the accounting of expenditures and funds to demonstrate performance and outcomes from funded programs.

The Crown Corporations Committee

The Select Standing Committee On Crown Corporations is one of three legislative oversight committees that actively ensure the financial performance plans of governments are maintained, the other two being the Select Standing Committee on Finance and Government Services, and the Select Standing Committee on Public Accounts. These committees meet throughout the year to hear testimony from the public, senior government officials and the independent officers of B.C. They help ensure that the government puts forward and attains goals and objectives.

The mandate of the Crown corporations committee is to critically examine the annual reports and service plans of B.C. Crown corporations. As part of the review process, senior officers from selected Crowns appear before the committee to present their corporation's latest reports and plans. To assess each Crown, committee members assess each of 11 reporting criteria [see box] laid out by the committee.

In developing the criteria, we maintained consistency with what our other legislative committees and accountability bodies such as the Auditor General were doing, and benefited from the work of such organizations as CCAF. My colleague Bill Bennett, vice-chair of the committee, deserves much of the credit for researching and assembling ideas for the committee to consider.

In 2002, the Committee entrenched its reporting principles in its Guide to Operations, which helps organizations that appear before the Committee understand the Committee's expectations and the types of information it requires.

Our reporting principles ensure that the mandate of each Crown corporation is clearly specified, that the goals and objectives and performance measures are both plainly stated and reasonably attainable, and that the financial and non-financial performance measures are met. This gives an integrated and balanced picture of the intended performance.

Committee members also have the opportunity to discuss with senior officers issues of concern and interest arising from the corporation's presentation to the Committee. The Committee can then follow up on its recommendations at the next review date of that Crown corporation.

Progress to date

B.C. has 25 Crown corporations, including such major corporations as B.C. Hydro and the Insurance Corporation of British Columbia. In addition, many other government organizations qualify as Crown agencies. So our committee has its work cut out for it. We recently completed the first round of meetings with Crown corporations, and the results have been very encouraging.

For one thing, our work is clearly keeping Crown corporation executives on their toes. This initial round has been the first time in many years that Crowns have gone through this process. Although past legislatures have created Crown corporation committees, no committee had actually met for 23 years before our first meeting. Corporation officers were understandably uncertain what to expect. We made an effort to clear up that uncertainty in our meetings with them and in our public reports.

One aim in our interactions with the corporations is to stress with them the importance of a strong connection between management and the Board of Directors. This is not a major issue in our larger Crowns, but we do see gaps needing attention in some of the other corporations. Our face-to-face meetings with them gave us the opportunity deliver this message directly.

Some corporations see their appearance before us as an opportunity to demonstrate that they are doing a good job. They use their meetings before our committee to demonstrate their progress against the goals and objectives established for them by the government.

A challenge for MLAs

We see the meetings as an opportunity to let the corporations know the public is interested in and concerned about what they are doing, and to serve as a channel for them to be accountable to the public.

Our recommendations often draw attention to the need for corporations to report with our reporting principles in mind. For example, we recommended that the British Columbia Housing Management Commission "implement the Committee's observations and suggestions for improvements in the Commission's future annual reports and service plans — in particular with respect to all eleven reporting principles." We said we were only partly satisfied that the service plan of the Oil and Gas Commission focuses on aspects of performance that are critical to the achievement of the Commission's goals, objectives and intended results.

For MLAs on the Committee, the work can be challenging. Each of us sits on several committees, plus we have substantial amounts of constituency work to perform. It is very difficult to come to committee meetings adequately prepared to ask meaningful questions. From past experience, most of us are capable of asking good general questions, but pursuing specific issues often requires a more in-depth understanding of a corporation.

My preference is not to focus heavily on the accuracy of corporation financial data, but to examine the linkages between the business plan and results. With all B.C. government organizations moving to the use of generally accepted accounting principles, the need to worry about the numbers has diminished. At any rate, a Crown corporation should be about more than dollars and cents – it should be about meeting public policy goals.

That leads us to focus our attention on outcomes. How outcomes are measured is an important question for us. One corporation, for example, indicated its intention to achieve a 15 percent improvement in one area. We wanted to know what the baseline figure was, how improvement would be measured, and how these results compared to those for similar organizations in other jurisdictions. A 15 percent improvement may not be much of an accomplishment if an organization is far below average among its peers.

The payoff

Our hearings allowed us to delve into some issues and trends of public concern. For example, there was some question about the extent to which B.C. Hydro was contracting out for services, and the implications of this practice.

However, the real measure of our success will be taken in our second round of accountability sessions, when we will see if the Crowns have responded to our first-round recommendations.

We are confident that they will. Our committee's message is consistent with the message of the B.C. government, with its emphasis on the importance of operating transparently.

Improving performance reporting is a small but important step in building the confidence of our citizens in the work of their governments. We in B.C. are proud to be leaders in this area, and pleased to be able to share our experience through CCAF's Accountability and Audit Advisory Committee. I would also welcome the opportunity to compare notes with my legislative colleagues in other jurisdictions.

Mr. Stewart can be reached at:

MLA for Maple Ridge-Pitt Meadows
and Chair, Select Standing Committee on Crown Corporations
Legislative Assembly of British Columbia
East Annex, Parliament Buildings
Victoria, BC
V8V 1X4

Telephone: (250) 387-2340
Fax: (250) 387-9064

Email: ken.stewart.mla@leg.gc.ca

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