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History of the Auditor – How Ontario Became a Have Not Province


This article explores the nature of the legacy of the Auditor’s role, it’s mandate, and it’s significance in balancing the books for taxpayers.

I also direct you to Rebecca Sciarra, Ontario Legislative Intern for the 2004-05 period, who had written about the Office of the Auditor General in Ontario.

A summary of the information is presented below.


The Audit Act of 1886 was created out of a fiscal discrepancy that revealed that fraudulent activity had occurred. There was a discrepancy of $14,680 found in the Treasury Department’s financial books in 1885. At the time, the Auditor Charles Hood Sproule had noted  the discrepancy and had it reported to the Treasurer, but made no statement of this to the legislature since he did not have the authotity to do so.

This led to the Audit Act of 1886. The Provincial Auditor then had the role as part watchdog; part in-house expert on ‘good’ fiscal management. The watchdog function was facilitated by the auditor’s removal from executive control.

The Provincial Auditor has been vested with the authority to examine any person on oath, in connection with any account audited and to report all public accounts and expenditures to the Legislative Assembly (i.e. Queens Park).

Each year, the Auditor General tables an annual report which provides legislators (MPPs) with information that allows them to judge how well public resources are being used.

Essentially, the Auditor General watches over the administration of Ontario’s finances and in doing so, helps elected representatives in the Legislature hold the government accountable for the way it administers the resources provided to it by the Legislature.

The Auditor General Act gives the Auditor the mandate to examine the government’s financial accounts and transactions and to report his findings to the Legislature.

The Auditor’s General’s mandate is:

  •  To report on instances of misuse or mismanagement of public funds, overexpenditures, and other irregularities.
  •  To assess whether public resources are well administered, whether government and broader public-sector activities are managed with due regard to economy and efficiency, and whether procedures to measure and report on the effectiveness of programs and organizations have been established and are operating satisfactorily. This is often referred to as the “value-for-money mandate” of the Auditor General.

The value-for-money mandate is quite significant and we will explore this in greater depth below.

The Auditor

The auditor that is appointed as an officer of the Assembly by the Lieutenant Governor is independent of the Government, as are its staff. The Auditor’s administration are also authorized to access all relevant information and records necessary to the performance of the Auditor’s duties.

The mandate of the office of the Auditor, is to “assist the Legislative Assembly in holding the government and its administrators accountable for the quality of the administration’s stewardship of public funds and for the achievement of value for money in government operations.”

The function, of providing elected representatives with thorough and objective information to use to assess the extent to which the executive has been fiscally responsible, has been up until recently, executed through 3 types of audits

As a reflection of the times, the responsibilities of the provincial auditor has changed over the years.

3 Pivotal Ammendments to the Audit Act

  •  Removal of the Provincial auditor from the authority of the Treasury Department in the 1950’s
  •  The reason the Provincial Auditor was removed from the authority of the Treasury Department, was because it *could* compromise the explicit duty of the Office in the first place. This change was done to promote greater fiscal accountability. This made the Auditor independent of the Government, with the watchdog status to hold the executive accountable
  •  Phasing out of the Auditor’s office performing pre-audit activities and conducting post-audits of government expenditures in the 1970’s

In the period before the 1950’s, pre-audits were normally conducted, however as things progressed into the mid 1950’s, the areas of provincial responsibility had increased greater than those controlled by Ottawa in the past. The size of government had increased, and more and more immigrants were piling into Canada. By the mid 1950’s, conducting pre-audits was practically impossible as identified by the Provincial Auditor at the time. The Auditor’s Annual Report in 1956-57 stated that not only were pre-audits logistically unfeasible, they were also ill-suited to sufficiently act as a control and review mechanism on government expenditures.

In 1971, the Committee on Government Productivity made amendments to the Audit Act, that established, that legislative auditing would be performed through performing post-audit activities rather than through pre-audit activities.

  • In 1971, the Committee on Government Productivity made amendments to the Audit Act, that established that legislative auditing would be performed through performing post-audit activities rather than through pre-audit activities. The Committee’s rationale, was that in addition to pre-audits becoming virtually impossible with the sheer size of government spending, the act of the Auditor being involved in a spending control function, in fact compromised his role as a servant of parliament.
  •  In 1978, further amendments were made to the Audit Act, with the adoption of value-for-money audits and this gave the Auditor the power to comment directly on the government’s fiscal management and it was an entity solely responsible to parliament.

Value-for-money Audits

While much more in depth information on this subject can be found in the Value-for-Money Audit Manual published by the Office of the Auditor General of Ontario, a short summary is provided below.

Value-for-money audits are assessments of whether or not money was spent with due regard for economy and efficiency and whether appropriate procedures were in place to measure and report on the effectiveness of government programs.

Under the Auditor General Act, the Auditor’s Office is required to report to the Legislature significant instances where it is observed that the government is not fulfilling its responsibilities in these areas. We will examine cases where the Auditor did in fact raise concern on the government not fulfilling it’s responsibilities.

To fulfill its value-for-money mandate, the Auditor’s Office annually conducts audits of selected ministry or agency programs and activities. Major programs and activities are generally audited every five years or so.

Every year, senior management of the Auditor’s Office consider a number of risk factors when selecting which programs to audit in the coming audit period.

These factors include:

-the results of previous audits,

-the total revenues or expenditures at risk,

-the impact of the program or activity on the public,

-the inherent risk due to the complexity and diversity of operations,

-the significance of possible issues that may be identified by an audit,

-the costs of performing the audit in relation to the perceived benefits.

The results of value-for-money audits are reported on in the Auditor General’s Annual Report and constitute a large portion of that document.

Of all the observations that the Auditor General reports on, value-for-money findings tend to attract the largest proportion of media coverage and interest from the public and from the Standing Committee on Public Accounts.

Below, is a diagram of the basic performance of a vfm audit. As you can see, the scale on the left takes consideration on balancing the cost and the significance interest to Parliament



Additionally, each value-for-money (VFM) audit must include certain criteria in the report which are described below



Having said all this, the 3 major changes of the responsibilities of the provincial auditor were important in order to keep up with the times.

As a result of the 1978 amendments, the Provincial Auditor not only acted as a source of information for how and where public moneys were being spent, but also provided an evaluative judgement on government expenditures.

The Auditor was now empowered to comment upon the economy, efficiency, and effectiveness of government programs, examine the accounting records of recipients of provincial transfer payments, and to audit agencies of the crown and crown controlled corporations.

The next big change, Bill 18

The next big change would arrive on November 30, 2004 when a new mandate was established for the Office of the Provincial Auditor and this was done through Bill 18, the Audit Statute Amendment Act. It was here, where the passing of the amendment law saw the Provincial Auditor of Ontario become the Auditor General of Ontario.

The bill gave a larger scope of legislative auditing that would be able to give a clear and accurate sense of how government is spending tax payer dollars, and the mandate of legislative auditing would have to include value-for-money audits of grant recipients.

This would include organizations in the broader public sector such as hospitals, colleges, universities, and school boards and any other organization meeting the definition of grant recipient and includes a expansion of value-for-money auditing to the electricity sector corporations and other Crown controlled corporations. The expanded mandate does not apply in the case of municipalities.

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