ARCHIVED - Review of the Governance Framework for Canada's Crown Corporations - Meeting the Expectations of Canadians

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11. Summary of Measures

Measure #1

The government will clarify the accountability structure for Crown corporations, including in the FAA, in order to describe the relationships between Parliament, the responsible Minister, the Board of Directors and the CEO.

Measure #2

The government will affirm, including through amendments to the FAA and other relevant statutes, that the responsible Minister is its representative.

Measure #3

To improve the communication of policy objectives and priorities from the government to Crown corporations, the responsible Minister will issue a statement of priorities and accountabilities to Crown corporations within his or her portfolio. The statement will be discussed beforehand with corporate management and the Board, but ultimately it will reflect the government's policy expectations for the corporation. The statement will be subject to an annual review and help form the basis for a periodic review of the corporation's performance.

Measure #4

In order to reaffirm that Boards of Directors are accountable for the activities and performance of the corporation to the responsible Minister, the government will embody the role and the responsibilities of directors in Part X of the FAA and in other enabling statutes.

Measure #5

The government will review the appointment of public servants as directors on the Boards of Crown corporations with a view to restricting or eliminating their participation. The government will take administrative action, and where necessary seek legislative changes, to implement this measure.

Measure #6

The government will enact the legislative changes required to ensure a split in the positions of CEO and chair of the Board for Crown corporations.

Measure #7

The government will require that the CEO be the sole representative of management to a Board of Directors.

Measure #8

To ensure that the Board may deliberate freely, and exercise the challenge function expected of directors, Board proceedings should remain confidential. The government will require that Boards of Directors of Crown corporations hold annual public meetings at which stakeholders could express their views and seek information about the activities of the corporations. Corporations are also encouraged to develop outreach activities to solicit input and feedback from stakeholders on an ongoing basis.

Measure #9

To assist the work of Board members, the government will issue to every new director, upon appointment, a guidance letter that would make explicit the expectations of the government with regard to the role and responsibilities of directors under law and in practice. The letter would also include provisions related to the values and ethics of public office holders and disclosure of conflict of interest.

Measure #10

To strengthen the corporate governance of Crown corporations, the government will work with Boards to adopt a charter that would define clearly the roles and responsibilities of the Board.

Measure #11

To further enhance the skills and performance of Boards of Directors and building on current orientation programs, the Canada School of Public Service will establish additional training and professional development programs on public sector management and Crown corporations.

Measure #12

Consistent with good governance practices, the government will ask Boards of Directors to establish regular assessments of their effectiveness and the contribution of individual directors as a self-development tool. The assessment of the Board as a whole will be communicated by the Chair of the Board to the appropriate Minister.

Measure #13

The government will require that Boards of Directors for all Crown corporations establish an audit committee.

• The committee would consist of a minimum of three members and would have the authority to engage independent counsel and expertise, as it deems necessary, to carry out its duties.
• The mandate of the committee should include the requirement to set up a process to investigate complaints related to issues of integrity and behaviour and to establish a risk assessment and management mechanism as well as adequate controls and protocols to mitigate those risks.
• The audit committee would also adopt an audit plan that would be communicated to the Board of Directors.

Measure #14

All directors on the audit committee must be independent of management and have financial literacy. An individual with financial expertise must chair the activities of the committee. The government will be mindful of this requirement in the context of the selection and appointment process of directors.

Measure #15

In order to enhance and protect the independence of the audit function, internal and external auditors will report directly to the audit committee.

Measure #16

Selection criteria for chairs and Board profiles will be made public by the government. Similarly, Crown corporations will make CEO selection criteria available to the public.

Measure # 17

The government will develop a central Web site to solicit potential candidates for director and chair positions.

Measure #18

The selection process for the CEO will be determined by the Board of Directors and will include, at minimum, advertising in either or both the Canada Gazette and the corporation's Web site.

Measure #19

The government will obtain references on all candidates for appointment as director or chair. In the case of CEOs, the Board's nominating committee will be required to do the same for any candidate it submits to the government for appointment. In addition, the government will continue to conduct background checks and ensure that candidates are not in a conflict of interest, prior to making any appointment.

Measure #20

The government will work closely with parliamentary committees to ensure a workable appointment review process that will not unduly delay necessary appointments.

Measure #21

The government will amend the FAA and enabling statutes to provide for appointments for up to four years.

Measure #22

To respond to the public interest in non-financial issues, the Treasury Board of Canada Secretariat will produce a guidance document for Crown corporations on annual report specifications, including the Management's Discussion and Analysis Section and issues pertaining to values and ethics.

Measure #23

In order to make the financing of Crown corporations more transparent, the government will also ensure that the Main Estimates document clearly identifies the funds allocated to each Crown corporation that receives parliamentary appropriations.

Measure #24

In principle, the government supports the use of a certification regime adapted to the reality of public institutions. The Treasury Board of Canada Secretariat will examine, in consultation with Crown corporations, the development of a certification regime that would be applicable to all Crown corporations.

Measure #25

The Access to Information Act should

• be extended to 10 of the existing 18 Crown corporations⁽¹⁵⁾ currently outside the provisions of the Act by an Order in Council;
• not include seven Crown corporations⁽¹⁶⁾ until the government has developed mechanisms to protect their commercially sensitive information;
• not include the Canada Pension Plan Investment Board at this time because of its federal-provincial structure. Its inclusion will require provincial consent;
• be amended to include protection for journalistic sources.

Measure #26

The government will amend the relevant legislation in order to allow for the appointment of the Auditor General of Canada as the external auditor or joint auditor for all Crown corporations, inside or outside the purview of Part X, Divisions I through IV, of the FAA. In recognition of the specific needs of commercial Crown corporations, and in line with current practice with regard to several organizations, the government would encourage the Auditor General of Canada to work in partnership with private sector auditing firms.

Measure #27

The government will implement the necessary legislative changes to provide the Office of the Auditor General of Canada with the authority to conduct special examinations in all Crown corporations.

Measure #28

The government will establish a more flexible system for the timing of special examinations, reflective of the level of risk related to each corporation. The risk analysis would be based on the complexity of the organization, the field of operation, and the changes taking place in the business and policy environment that may impact on the corporation. The Office of the Auditor General of Canada would have the responsibility for determining the frequency of special examinations for each Crown corporation. At a minimum, all corporations would undergo a special examination every eight years.

Measure #29

The government will require that each special examination report prepared by the Auditor General be submitted to the Board of Directors, the responsible Minister, the Treasury Board, and Parliament, to maximize the value of these reports to Canadians. In accordance with the provisions of the FAA to protect commercial interests of a parent Crown corporation or a wholly-owned subsidiary of a parent Crown corporation, the government will work with the Office of the Auditor General of Canada to develop a protocol relating to the release of the special examination.

Measure #30

The government will ask the Advisory Committee on Senior Level Retention and Compensation to review the compensation provided to chairs and directors of Crown corporations.

Measure #31

The government intends to develop regulations pursuant to the FAA to provide for an advance of costs to directors in much the same manner as in the Canada Business Corporation Act.

 

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