February 9, 1994                                                                   PUBLIC ACCOUNTS COMMITTEE


The Committee met at 10:00 a.m.

MR. CHAIRMAN (Windsor): Order, please!

Ladies and Gentlemen, if everybody is ready we will begin the meeting. I call the meeting to order and the first item of business I have is the minutes of October 14 and November 23, can I have a motion to adopt these minutes?

On motion, minutes adopted as circulated.

MR. CHAIRMAN: I don't know if there any members of the media here, I don't see anybody, there is not a lot of media in Stephenville although I expected The Georgian to be here because they expressed some interest in this issue. They will probably be here eventually. It is too cold for them I suppose to get started this morning, their cameras are frozen.

I would like first of all to welcome everybody here. I would like to introduce the committee members, to my far right is Ms. Elizabeth Murphy who is the Secretary to the Committee and Deputy Clerk of the House of Assembly. Mr. Glenn Tobin, MHA for Burin - Placentia West. To my immediate right is Mr. Danny Dumaresque who is the Vice-Chair and Member for Eagle River; Mr. John Crane from Harbour Grace; Mr. Melvin Penney from the great District of Lewisporte and Mr. Oliver Langdon from the District of Fortune - Hermitage. Mr. Mark Noseworthy is our research person and Jack Oates is over there with his ears on. He listens to everything we say and do, he records everything we say and do and he brings it back to the people in Hansard who transcribe it verbatim, as they do with everything that takes place in the House of Assembly.

Having said that, therefore I would ask - particularly of the witnesses who are here for the first time - if you would speak into the microphone and if I fail to identify you before you speak, would you identify yourself so that the people back in Hansard, in Confederation Building who have to transcribe, know who is speaking. They are tired of listening to our old voices, they can usually pick us out but for the people who are here for the first time they have a little more difficulty. So I ask you to please speak clearly into the microphones and again identify yourself if I fail to do so.

Also I want to welcome the staff from the Auditor General's office. Perhaps Ms. Marshall you would like to introduce the people who are with you this morning.

MS. MARSHALL: Yes, to my immediate right is Mr. Bill Drover, Audit Principal with the office and to my immediate left is Mr. Claude Janes, Audit Manager with our office.

MR. CHAIRMAN: Thank you very much and I welcome members of the Board. Mr. Mercer, who is the Chairman of the Board, perhaps you would like to introduce the people who are with you this morning.

MR. MERCER: Thank you, Mr. Chairman. To my left is board member Mr. Mike Finn, to my immediate right is our superintendent, Mr. Andy Butt and next to Andy is our business manager, Mrs. Bonnie Clouter.

MR. CHAIRMAN: Thank you very much. I would also like to mention Mr. John Berniquez from the Department of Education who generally sits in as an observer whenever we are holding hearings dealing with any of the school boards and we welcome him here this morning. We are pleased to have him here with us.

Now that the news media have arrived - the car was cold this morning, you are a bit late - we want to welcome you. You are certainly welcome to be here. These are public hearings, anything that is said is public information of course. Our records are kept and transcriptions will be available. If you wanted to take some pictures we will give you a minute to take some now or you can do some afterward. We do permit voice recordings as we do in the House of Assembly but not television recordings.

I take it you are from the Georgian?

AN HON. MEMBER: Yes.

MR. CHAIRMAN: So we are not worried about television cameras this morning, but we do want to welcome you to the meeting.

Let me say, for the benefit of the witnesses, that you will be giving evidence under oath. This is not a trial, by any stretch of the imagination. It is simply a hearing for the Committee to gather information to report back to the House of Assembly. The Public Accounts Committee, as we have said many times, is basically the final step in the accountability process. The issues are commented on primarily by the Auditor General in the Auditor General's Annual Report. It is brought to the attention of the House of Assembly, and the Public Accounts Committee is a Standing Committee of the House of Assembly who deal with many of those items. We choose some of the items that are reported on by the Auditor General, or brought to the attention of the House. We may also deal with other items that are brought to attention by Members of the House, by the House itself, or that the Committee itself feels, in fact, may be worthwhile of the Committee's time and attention.

In this particular case we are here to deal with a section commented on in the Auditor General's Report, paragraph 4.6 of the Auditor General's Report of 1992, dealing with the Appalachia School Board.

Again, we will say we are here simply to gather evidence, to hear your point of view, to give you an opportunity to explain your point of view, to give the Auditor General and her staff similar opportunity, not to enter into a debate or argument, simply to hear both sides of the story and the Committee will report back to the House of Assembly in due course.

Having said that I will ask the Clerk, if she would, to swear in the witnesses.

 

Swearing of Witnesses

Michael Finn

James Mercer

Andrew Butt

Bonnie Clouter

MR. CHAIRMAN: Thank you very much. We will proceed now with the hearing on this matter. I am aware that Mr. Mercer has to leave around 11:00 or 11:15?

MR. MERCER: About 11:25, Mr. Chairman.

MR. CHAIRMAN: Mr. Mercer has been subpoenaed to a court hearing, I think. We will excuse him at that point in time if we are not finished.

MR. MERCER: Thank you.

MR. CHAIRMAN: I, myself, have -

MR. TOBIN: That is one of the difficulties of being a social worker in this Province.

MR. CHAIRMAN: Oh, sympathy coming from a former social worker, and a former minister.

I also have an engagement around 12:00 here in this hotel, so I am going to try to sneak out, if I can, if we are not finished at that point in time. If we are not finished, we can come back after lunch, if you want to do that. We will see how we progress during the morning, and the Committee can give me direction at the appropriate time.

As I mentioned earlier, we are dealing with the Auditor General's Report of 1992, and specifically the comments dealing with the Appalachia Roman Catholic School Board.

The Auditor General made a number of points dealing with general financial management of the Board, and it is clear from the information made available to us that obviously there were difficulties in combining two boards together under one board, and that is to be expected and it is not unreasonable.

There were certain items that the Auditor General pointed out and they were a matter of concern. As always, with every public agency, the purchasing, and the public tender act, is a matter of concern that seems to come up every time we deal with any board or agency outside of government departments, and sometimes within government departments too, for that matter. So there are a number of items like that that have been brought to our attention.

Perhaps I will ask the Auditor General now if she would like to make a brief opening statement by way of introduction of this particular topic.

Ms. Marshall.

MS. MARSHALL: Thank you, Mr. Chairman. In March of 1992 we commenced a review of the Appalachia Roman Catholic School Board. Our audit was directed primarily to those systems and transactions relating to financial management, fixed assets and purchasing. Other areas, such as transportation and salaries, were not included in this review but may form part of future audits.

Our audit procedures included testing for compliance with the various authorities under which the Board operates. Our review was designed to assess: first, whether the financial management system was adequate to provide information to management and the Board for decision making and control of the Board's revenues and expenditures; second, that the Board was in compliance with the Schools Act and related regulations; third, that the policies and procedures were adequate relating to the control and use of fixed assets, and; fourth, that the purchasing system was adequate to ensure monitoring and control of the purchase function and compliance with statutory requirements.

As a result of our review we reported as follows. In the financial management area: we concluded that there were a number of areas relating to financial management which need to be improved. For example, policies and procedures in this area are not clearly defined and communicated to staff. Also, a number of cases were noted where the Board did not comply with the Schools Act.

In the area of fixed assets, control requires improvement. All fixed assets are not recorded on the balance sheet and they are not accounted for by the Board by other methods.

In the purchasing area our concerns related to a failure to document procedures to indicate that the Board had complied with the Public Tender Act.

Thank you.

MR. CHAIRMAN: Thank you very much. Mr. Mercer, would you like to make any opening comments?

MR. MERCER: Yes, Mr. Chairman, thank you very much. I guess what I would like to say, and you alluded to it, Mr. Chairman, in your opening remarks, is that both boards had just come together when the audit was done. At that time both boards were operating, before they came together, with two different sets of policies, and we were in the formation of putting a policy manual together at that time, which is still really ongoing.

I guess the main thing was that we were concentrating on efficiency. At one point in time in the last three years we were well over $1.5 million down into a line of credit; at this point in time, I can report it this year, and we are almost through the year now, or well on half-way through the year, we have not yet touched our line of credit. So I feel that we are tremendously efficient right now as we operate and set our policies and procedures in place.

I, of course, handed you the annual report which will give the Committee an idea as to what we were doing and what we are about at this present point in time. This is the fourth year that we have come together right now. I guess that is the big thing we have concentrated on in trying to bring the two boards together, to operate the educational system in Bay St. George in the most efficient way possible, to make the educational system better for the children and much more efficient and cost saving. I think we have made tremendous steps in that. For the specifics we are dealing with here I guess our superintendent would be able to address some of those policies and procedures we have put in place and that have made some difference in the last three years.

MR. CHAIRMAN: Thank you, very much. As we have said we are dealing with one board now where there were two, when most of the items referred to in this report were actually being dealt with. Nevertheless they were items that are of concern and we need to look at that. I guess of importance to the Committee will be what corrective action has been taken since the Auditor General's Report began. We are not here to try anybody but are simply here to find out what took place in the past, what has been done about it, and what needs to be done about it. The House of Assembly will deal with our recommendations in due course.

Mr. Penney, would you like to begin questioning today?

MR. PENNEY: Thank you, Mr. Chairman.

As the Chairman has stated this is just the next step in the process of accountability because I think we all recognize that it is public funds that are being expended and I think the taxpayer demands that kind of accountability. Now, having looked through this booklet, and I am assuming, Mr. Speaker, that everybody, including the witnesses, would have a copy of this?

MR. CHAIRMAN: I think so. Yes.

MR. PENNEY: One of the items here that I am somewhat concerned with is the statement on Page 6 where the Auditor General says: our audit disclosed that board trustees are reimbursed while travelling on behalf of the Board up to $75.00 per day for meals and sundries. This does not include accommodations and other expenses such as taxis. In addition to the $75.00 per diem we noted cases where items such as meals, telephone calls, and movies were claimed as part of a hotel bill. Now, I have some specific questions to ask as it relates to that but before I ask those specific questions I wonder if somebody first of all could comment as to the justification of that kind of per diem and the justification of further expenses for meals in addition to that, and whether the same practice is being followed today, whether the same practice is being followed since the Auditor General's Report, whether there have been any changes?

MR. MERCER: Well, the $75.00 a day has been broken down. First of all I might comment on the fact of other things being involved there, movies and different things like that, and the inadequacies that took place. That was because of the policies of both boards and that has been corrected. What we have now is the seventy-five dollars is a ceiling; you cannot spend over that ceiling if you are away for a full day, but the actual per diem is forty-five dollars a day not including tax, tips and different things like that, that you would incur if you were away per day.

MR. CHAIRMAN: Thank you, Mr. Mercer. Mr. Penney.

MR. PENNEY: So the per diem then has dropped from Seventy-five to-

MR. MERCER: Well, what we have actually done is -

MR. CHAIRMAN: Mr. Mercer.

MR. MERCER: The seventy-five dollars a day was sort of - the policies of both boards were slightly different so what we have done, is, we sat down and formulated a policy to be much more precise with that, in that there would be no entertainment and the policy as such would be forty-five dollars per day excluding taxes or tips or anything like that that you would incur, and up to a ceiling of seventy-five dollars per day and by no means, not over.

MR. PENNEY: Okay. In your reply to the Auditor General, there was a comment made: Sundry expenses are essential since travel usually brings its own expenses that would not be incurred when at home. Could you give me some idea as to what those extra expenses would be that you call essential, and were brought about because of travel that would not be incurred while at home. Give me some idea as to what that would be.

MR. MERCER: I guess if you were away for any period of time we were looking at things like dry-cleaning or laundry or anything like that which you might incur, if you were away for three or five days depending on if you were away and had to stay longer than anticipated; but not over seventy-five dollars a day, as we really wanted to express in the policy that that would in no way take place.

MR. PENNEY: Okay. You also state, and I say you, I don't specifically mean you, sir, but somebody has stated that the trustees feel that the per diem travel rate that has been charged up until this audit, was not unjustified and you have done a comparison with government. I presume that would mean federal and provincial; you have done a comparison with other school boards and town councils, those types of things. Can you tell me exactly what groups or what town councils, or what other school boards or what government agencies were in fact used to make your comparison?

MR. MERCER: Well again, Mr. Chairman, remembering that we were dealing with two policies of two separate entities when we came together first, we sort of let the thing, in the formation of policy we let the thing - well the audit was done almost immediately after we came together just that first year and we had not yet formulated a direct policy for the Appalachia Roman Catholic School Board at that time. At the time of the audit we were formulating the policy on the travel for trustees and for senior management staff.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: I would like to just finish with this one particular item, Mr. Chairman, if I may, that is the only item and I will then pass to my colleagues.

MR. CHAIRMAN: Go ahead.

MR. PENNEY: You state that the per diem of seventy-five dollars for meals and sundries was not unreasonable in your opinion when compared with rates used by government departments. I think the comment made was: when compared with expense allowances for assistant deputy ministers, deputy ministers, politicians and then it says meals, entertainment, et cetera and you say that the boards per diem is not exorbitant.

I have here a copy of the travel rules that comes from Treasury Board explaining exactly what is permissible and what is not for deputy ministers. For a deputy minister travelling on the island portion of this Province, he is permitted six dollars and thirty-one cents for breakfast, eight dollars and forty-one cents for lunch, thirteen dollars and sixty-six for dinner, for a total of twenty-eight dollars and thirty-eight cents. If he were to travel to Labrador that total is thirty-one dollars and fifty-three cents. If he leaves the Province and travels anywhere else in Canada it is forty-two dollars and four cents. Now, do you still maintain or has your position changed - do you still maintain that your rates are not exorbitant in comparison with those others? Do you still maintain that those rates are justified?

MR. MERCER: Yes, Sir, I do.

MR. PENNEY: Okay, well back to my question, what other school boards, town councils and government agencies did you poll to make this conclusion? There is an article in the paper that the mayor of your town says that there was no check with the town council in Stephenville and they maintain that their per diem rate is 50 per cent lower than yours.

MR. CHAIRMAN: Mr. Mercer.

MR. MERCER: I guess, Mr. Chairman, when we sat down to formulate the policy we just took a middle line. That is the only answer I can give you. We felt that the forty-five dollars plus sundries, taxes and tips would not exceed seventy-five dollars but we looked at it as at forty-five dollars.

MR. PENNEY: I have to make one comment: I totally agree with the position that the government reimbursement for expenses is inadequate. I think that is a direct quote, that the government rates are inadequate. I have no quarrel with that. I don't think anybody questions that the government rates of reimbursement are inadequate. Probably everything that government expends in any department is inadequate because we are in rough times and this is all the public money that they have but those other government departments don't have that kind of authority to be able to indiscriminately change the rules. Anyway, Mr. Chairman, I will pass for now.

MR. CHAIRMAN: Thank you, Mr. Penney. I think your point is well taken. I might say for the benefit of the Board that the politicians seated before you are entitled to a per diem of forty dollars a day, by way of comparison for your benefit, and that includes taxes, tips and everything else. You won't get those kinds of - I guess, contrary to public opinion, we don't have lavish, first-class expense accounts.

I think the point Mr. Penney was making is well taken, and it something, I guess, that really comes back to what we are finding, as I mentioned earlier in my opening comments, relating to all Crown corporations and agencies, the rules tend to be a little different than for government itself. Perhaps what this committee is finding is that maybe there is a reason to deal with that, and maybe a policy needs to come forward from government.

This is one of the concerns that I had as I looked at many of the items commented on by the Auditor General in the report, and this is not unique to your board. Don't think that we are acting on your board alone. Every board that we have dealt with basically has the same types of items.

I think what we are seeing is that many of the rules and policies of government and the Department of Education that are in place are not necessarily being followed, and if they were, some of these difficulties would not be as evident as we go from board to board or agency.

Who would like to carry on? Mr. Tobin?

MR. TOBIN: Mr. Chairman, I have just a couple of brief comments, if I may. First, I think, as it relates to politicians, you will find that the Cabinet ministers have an expense account that is much higher than $40 a day, so probably when we talk about politicians we have to put it in perspective. The peasants don't have one that great, but the ministers do fairly well in terms of theirs.

It looks like, under section 31 of this Schools Act, the school boards are not allowed - probably I will give this to the Auditor General - that section 31 of the Schools Act prohibits school boards from reimbursing people for lost wages?

MR. CHAIRMAN: Ms. Marshall.

MS. MARSHALL: I interpreted that section of the legislation - it says: "Members of a school board or of an executive or other committee of a school board shall receive no remuneration for their services,' so I would interpret that as receiving no remuneration for the services that they render as a member.

MR. CHAIRMAN: Mr. Tobin.

MR. TOBIN: Well, obviously, if it contravenes section 31 of the Schools Act, it is not permitted, but I think we should certainly take a broad look in that respect, and maybe someone should make the appropriate recommendation to government for it to be changed, whether we have a role in that or not. Because it is strange if the school boards cannot reimburse elected officials for expenses incurred, and for lost wages, when municipalities can. Municipalities in this Province do it, and if municipalities can do it for elected officials, then I'm not sure why school boards shouldn't do it. And I don't think it should be a burden placed upon anyone to have to take one's vacation in terms of serving one's school board or any other -

MR. CHAIRMAN: Mr. Tobin, if I might, just by point of clarification here, if I can interrupt you just for a moment, what the Auditor General is saying is that the Schools Act, which is the act that this board is under, specifically states, and she has interpreted that way.

As I recall, the Municipalities Act was changed a number of years ago to allow municipalities to give certain levels of compensation within certain guidelines. They deal under a different act, of course, although your point may be valid.

MR. TOBIN: The point I am making is that -

MR. CHAIRMAN: The point is that the act now needs to be changed.

MR. TOBIN: That's right.

MR. CHAIRMAN: You just don't do it unilaterally. If we don't agree with the act, then there is a procedure to deal with that, which is in the House of Assembly, with legislation brought forward by the Minister of Education. So that is another issue.

Please carry on; I am sorry to interrupt.

MR. TOBIN: Probably we could make a recommendation to that effect.

There are just a couple of things. I noticed the Auditor General made a few recommendations to the school board as it relates to recommending that the financial management manual be used for the documentation and communication of board policies and procedures in the area of financial management and control. Has the board implemented that policy yet?

MR. BUTT: The policy manual was begun basically as soon as the board became, I guess, official on July 1, 1990. In fact, we have a copy here with us if you wish to peruse the policies which have been approved by the board. We also have a copy of the draft procedures manual, the financial management manual, which is being worked on within our accounting department. So, the documentation is proceeding and is added to, I guess, as much as is possible to be added to each year in our operation.

MR. TOBIN: In terms of the point I addressed earlier of reimbursement of board members who have to go on board business, do you continue to reimburse them for their salary losses?

MR. MERCER: We interpreted the act a little differently. As the act, section 30, states: `Members of a school board or an executive committee or other committee of a school board shall receive no remuneration for their services' - and this is the part that we kind of concentrate on - `but expenses reasonably incurred by them by reason of their attendance at a meeting', we interpreted that, Mr. Chairman, as, to lose wages means taking a loss, so any loss would be reimbursed. So it wasn't remuneration, but it was reimbursement. That was our interpretation of section 30, so we didn't feel we were breaching the act. And we have gotten some other opinions on that from our independent auditor, who interpreted that for us the same way, plus some legal advice on it. So we don't actually get paid for attending meetings or attending day-long meetings or being out of town. We are reimbursed for anything that we might lose because of that.

MR. CHAIRMAN: Ms. Marshall, do you want to respond to that?

MS. MARSHALL: Yes. I interpreted expenses to be things such as meals or accommodations, but remuneration, to me, clearly conveys that you are being remunerated for the time that you (inaudible).

MR. TOBIN: Did you have a legal opinion on that, Ms. Marshall?

MS. MARSHALL: No, I did not have a legal opinion on that.

MR. TOBIN: You didn't.

MR. MERCER: Mr. Chairman, one example would be - and Mr. Finn could pass out a copy - that we have an employee who works with the company. If he would be called into St. John's, say, for instance, to attend a meeting of the school board, the company will permit him to go providing that they bill us for his day's wages, otherwise, he would have to lose the day's wages. But he can go and attend the meeting in St. John's for one day and they will bill the school board for that day.

MR. CHAIRMAN: Perhaps I can ask the Auditor General, would you consider an invoice to the board, such as this, paid by the board. Obviously, this is not being paid to the employee. This employee continues to receive his salary.

MS. MARSHALL: No, I - no.

MR. CHAIRMAN: Would you consider this a legitimate board expense?

MS. MARSHALL: No, because that is to compensate for the remuneration for the employee. It goes back to the person who is representing the board, so I would not construe that as a valid expense.

MR. TOBIN: The situation is that there are two different interpretations of the act, one by the Auditor General and one by the school board, and I don't know who is in a position to judge or who has the appropriate interpretation.

MR. CHAIRMAN: Well, I assure you I'm not and I don't think this committee is. I recall the same argument, as you quite correctly pointed out, coming from municipalities a number of years ago and then we dealt with that. That is perhaps what this board should do, recommend that the Department of Education have an amendment to the act which clarifies that.

Mr. Butt you wanted to comment?

MR. BUTT: Yes, Mr. Chairman. This particular policy direction was taken in consultation with the external auditors for the board, who also expressed opinion on what the act says and what is a legitimate expense. This action dates back to probably more than ten years ago, having, I guess, first occurred with the Port au Port School Board. Since that time it has been informally commented upon by members of the legal profession as to what does that particular part of the act require us to do? I think, as Mr. Mercer is explaining, that the members of the school board, itself, are comfortable with the interpretation of expenses in the way in which we gave it. We certainly would welcome any clarification on that particular matter from the Legislature.

MR. CHAIRMAN: Thank you very much. Mr. Tobin, would you like to continue?

MR. TOBIN: Well, I am sure somebody wants to ask a question, but I agree that someone has to put an interpretation on that act and probably you shouldn't leave it to the Auditor General to do it. May I suggest that you people contact the Department of Education, as well, and ask for an interpretation.

I will pass to someone else.

MR. CHAIRMAN: Maybe I'll ask the representative of the department, Has the department ever dealt with that with other school boards? Has there been a legal interpretation from the Department of Justice? Can you enlighten us any?

MR. BERNIQUEZ: I don't have any particularly legal interpretation, but it was always my understanding that board members voluntary -

MR. CHAIRMAN: Jack, can you hear that? Would you mind coming up to the microphone for the benefit of Hansard?

Mr. John Berniquez from the Department of Education.

MR. BERNIQUEZ: Mr. Chairman, it is my understanding that the position of a board member is an elected position, primarily, of course, and is done basically on their own time. So I don't think that we would necessarily consider remuneration of lost wages to be legitimate, although I don't know of any legal interpretation that we may have. We would have to certainly look at the act and perhaps contact our Justice officials. That is my understanding.

MR. CHAIRMAN: Thank you very much.

MR. TOBIN: I would like to ask a few questions.

MR. CHAIRMAN: Mr. Tobin.

MR. TOBIN: That is okay, in that sense, but let me ask you this: Do you know of any school boards in this Province which bill municipalities for lost wages for their employees when they are attending meetings?

MR. BERNIQUEZ: No, I don't.

MR. CHAIRMAN: Have you had this difficulty with other boards, for example?

MR. BERNIQUEZ: Not to my understanding. This is the first case that I have known.

MR. CHAIRMAN: This is the only case that has arisen, and the Auditor General concurs, they are not aware of any other.

Thank you very much. Having said that, I think it still stands that it needs to be clarified. Obviously, the board has taken one position, the Auditor General another, and we are not in a position to judge. So I would suggest that the committee might wish to include in our recommendations to the House of Assembly that the matter be dealt with by government and by the Department of Education.

Mr. Tobin, are you finished for now?

Mr. Dumaresque.

MR. DUMARESQUE: Thank you, Mr. Chairman.

I just wanted to touch on the area of the Public Tender Act. As Mr. Windsor has pointed out, it is not unusual, as a matter of fact, it would be quite unusual, if we didn't find some exceptions to the Public Tender Act within the school board. But I notice page 11 references a situation where, of three purchases tendered by the board, over $5,000, in one instance the tender was awarded to other than the preferred bidder, and this was not reported as required by the Public Tender Act. I am just wondering what explanation there is for not awarding it to the preferred bidder, and what explanation for not advising the Lieutenant-Governor in Council of the exception.

MR. BUTT: Mr. Dumaresque, the tender which was called at that time was specifically for a used service vehicle, and we did not find ourselves in a position to be able to purchase for a new vehicle where we would be able to hold to a particular set of specifications that was narrow enough to be able to, I guess, be absolutely clear on who the tender might be awarded to.

We had, I guess, been clearly looking for the newest vehicle with the lowest kilometres, with the most warranty and the best serviceability, and the Public Tender Act doesn't allow for, I guess, a whole lot of interpretation when you look for that type of leeway in your specifications.

We had some standards, in that we wanted a six-cylinder vehicle. We wanted low mileage, with considerable warranty left. We had a range that we were looking at for the purchase of the vehicle, and we received three bids. The one which was chosen had low kilometres, three-and-a-half years of warranty left, was a six-cylinder and so on. So in our, I guess, assessment of the bids which were received, we believed that to be the preferred bidder.

In choosing this particular one, one of the vehicles, the higher priced one, was out of the picture because it was higher priced, and it was a choice between two 1989 models. One was a V8 with high mileage and virtually no warranty left, and the other was a six-cylinder with only 5,000 kilometres of mileage and plenty of warranty left. So we believed that was the preferred bidder, and awarded the tender on that basis.

Obviously, if we believed that to be the preferred bidder, then the subsequent requirement to get the approvals of the Lieutenant-Governor in Council and so on, we did not believe were necessary.

Through discussion of this particular item, and subsequent discussions with government purchasing and so on, we have tightened up our tendering procedures so that we will not find ourselves in that situation again, and we will be, I guess, much more to the letter of the law in terms of what the allowances are under the Public Tender Act. So, in effect, that particular one, we believe that we had the right to choose the best value for the money that we had available.

MR. CHAIRMAN: Thank you, Mr. Butt.

Mr. Dumaresque.

MR. DUMARESQUE: In the next paragraph, referring to purchases less than $5,000, it indicates that in eight out of ten items that were selected, the Auditor General could not determine whether the lowest price had been obtained because there was no documentation of quotes. Would you be able to advise us as to whether that procedure has been tightened up, and, if in fact the Auditor General were to go back now for anything under $5,000, that she would be able to find the records and verify the quotes and so forth?

MR. BUTT: Yes. Mr. Chairman, that procedure has been tightened up considerably, so that if anyone were to inspect our tender calls this time, they could find all quotes and all documentations related to those quotes. It is just unfortunate that we did not maintain the records in the way in which the Auditor General wished them to be maintained at that time. Our policy was to award to the low tender and we have been consistently doing that throughout my history with this particular school board, but it is just unfortunate that the documentation was not there to actually show that we were in compliance on all of the other items referred to.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: A final point on the compliance of the Public Tender Act, I guess, as it relates to the last part of the submission by the Auditor General that, in one case some quotes were from two suppliers of janitorial supplies and it was found that the second supplier had quoted a lower price but did not get it, and the explanation was that it was more convenient to deal with one supplier. What kind of convenience was there that would allow you to divert from the lowest bidder of janitorial supplies?

MR. BUTT: Mr. Chairman, the process in use was an old one, dating back to when cash flow and, I guess, considering availability of supplies, it was really hard to match the amount of monies available with what we wanted, and the process that was used was to ask for quotes on things like toilet paper that we would use in large quantities, garbage bags that we would use in large quantities, wax and so on from different companies, and then we would pick off the quote the items which we believed to be the best price at the time. Items were ordered basically on a week-by-week basis, so that this particular manner refers to sometimes the person making the order, who, when placing it for some items, would include some other items that might not have been the lowest price; because there was a service truck or a delivery truck that would be coming with twenty or thirty cases of toilet paper and you request that they throw in a couple cases of garbage bags that were slightly higher in that particular company. And having had that discussion, we have fixed that particular problem because we now will tender a complete package and ask for a single price for a total quantity of items that we would purchase in a particular year. We now do not deal with two suppliers, we deal with one supplier having won the bid through fair public tender.

MR. DUMARESQUE: I just want to touch on one other area, and that is the area of where the board gave a 30 per cent increase to two employees just before the amalgamation of the two school boards. Page 165, I guess. Page 186 shows that the two employees received increases in excess of 30 per cent.

First of all, I guess, I just wonder how the board could actually do it. Do you have to go - is there any mechanism at all where you are subject to the Department of Education or Treasury Board or any place before you make such adjustment? Is this the kind of liberty that the school board has, that any time if you wanted to reclassify people and therefore give them higher salaries that you can do it on such an ad hoc basis? Also, apart from that question, how could this be justified in an atmosphere of very small increases, if any, from the public service generally in the last three or four years?

MR. MERCER: I would like to comment on that, Mr. Dumaresque. That was done before the boards came together. It wasn't done by the Appalachia Roman Catholic School Board. It was done by the Bay St. George Board at the time. Of course, that board no longer exists, but, having been around at the time, I can speak to the issue.

I am not sure of the act, but I feel, and I think I would be right in saying, that for certain personnel who are not in the bargaining unit, the school board can negotiate salary for those people, such as the superintendent, business manager, supervisor of works, and different people like that. The school board can set their own salary. There is a sort of uniformity, I guess, across the Island and at that time the Bay St. George Roman Catholic School Board felt that these people, as the boards came together, were very grossly underpaid, and it was just a levelling up. There were no past wages or back wages paid - the wages were paid just as they were - there was no retroactive pay involved, there was just a bringing up on an even par as the two boards came together. But that school board doesn't exist anymore.

MR. DUMARESQUE: The answer then, to the question, is that, yes, the school board does have the liberty with all of its management people to reclassify at any point in time?

MR. MERCER: Management people are just - I guess you would be considering just four or five people. There would be the superintendent, assistant superintendents, business manager, and supervisor of works. All the other people who work for school boards are in bargaining units, so the salary is set and arranged as such on their contract.

MR. DUMARESQUE: There was never any submission to the boards? Well, I guess that may not be a fair question because you were not there as a school board at the time that these kind of discrepancies occurred. Up to a 30 per cent increase existed between the business manager for this particular school and the one next door? It seems kind of unusual that such a discrepancy would exist but obviously I take your word that it did. You would have to ask what the business managers, or the others, were doing in those types of positions, knowing they were so underpaid just next door to another school board. That is an observation, I suppose, as much as a question. That is it on those things, Mr. Chairman.

MR. CHAIRMAN: Thank you, Sir.

Mr. Crane do you have any questions?

MR. CRANE: Fixed assets, Mr. Mercer. Looking down over the list of fixed assets certainly the Auditor General finds many things wrong with the recording of fixed assets. Of course you would not have to do much of a study to see a lot wrong with it. I am wondering how in the world you would ever keep a record of what you have, or how do you know what you have? You do not know what you have apparently because it says the recording of $203,181 is your fixed assets when documentation shows you have $92 million. Now, that is quite a discrepancy I would say. Where in the world did these two figures come from?

MR. MERCER: I think I will refer that to our superintendent, Mr. Chairman.

MR. BUTT: Mr. Crane, the figure of $92 million represents 600,000 square feet of building space multiplied by approximate value of $150 a square foot, if you were talking about replacement, and that would represent the $92 million. Of the $90 million figure the buildings themselves would probably be worth in the neighbourhood of $80 to $85 million.

MR. CRANE: So that leaves you with about $6 or $7 million worth of fixed assets?

MR. BUTT: Right, and it has been acknowledged that that is a provincial weakness in school board operations which is presently being worked on. In fact there are recommendations now to the Department of Education to adopt a particular format for doing asset control, whether it be removable assets or fixed assets, and it is expected that in the next round of changes with the school board structures those types of things will have pretty well standard applications right across this Province.

MR. CRANE: Have you made any effort since the Auditor General's Report to maintain a ledger or to tag equipment for fixed assets?

MS. CLOUTER: We are in the process right now. We have a fixed asset manual done and are waiting for approval, I guess, or waiting for some word from the Auditor General. We had a copy submitted to her, and we are also in the process of looking at a computerized package to handle our fixed assets and purchasing tags to do it. We have also made an effort on our financial statements to set up this approximately $38 million immediately after the Auditor General's Report on fixed assets.

MR. CRANE: Well, you are certainly making an effort anyway.

MS. CLOUTER: Definitely.

MR. CRANE: It never ceases to amaze me how a school board - and you are not the only school board, like Mr. Windsor says you have assets thrown all over the place, and I am sure in this day and age there is always the opportunity for someone to steal. You would never know if anybody was stealing from you or not when you have no record.

MR. CLOUTER: I think, Mr. Chairman, if anybody was around years ago fixed assets were never recorded in school boards, years ago.

MR. CRANE: I know years ago. There were a lot of things never recorded.

MS. CLOUTER: That is right.

MR. CRANE: It is a good thing some of them were not recorded.

MS. CLOUTER: That policy has sort of come down through the years, so....

MR. CHAIRMAN: I think, Mr. Crane, if I could just interject for a moment, I think what the Auditor General was talking about here was more a different way of accounting rather than anything being done improperly here.

MR. CRANE: Yes, I know, but -

MR. CHAIRMAN: I think the system is in place now - or you are getting it in place and the Auditor General is reasonably satisfied with the process?

MS. MARSHALL: Yes, the school boards are working with the Department of Education and coming to a consensus on how this should be recorded on their financial statements, and also what procedures and polices should be in place within each individual board to keep track of their capital assets. They did submit a copy of the manual to my office which we reviewed and it looked okay when we did the read through. We are now using that manual in conjunction with an audit we are currently carrying out to make sure that it is going to provide all the controls that they need.

MR. CHAIRMAN: Are there no policy guidelines established by the Department of Education so there is a uniformity of systems for all school boards?

MS. MARSHALL: No. Prior to the commencement of audits of the school boards we were not aware that the Department of Education had issued any guidance or policies or procedures regarding control over capital assets.

MR. CHAIRMAN: It appears to me - sorry, Mr. Crane, to interrupt, but I will get back to you in half a second -

MR. CRANE: Go ahead. That is okay, you go ahead. You are doing fine, thank you.

MR. CHAIRMAN: From our discussions with a number of school boards there seems to be a different system for every board to some degree in accounting. Accounting, I always thought, should have been fairly uniform simply from the basic accounting policies and principles that accountants should use. I'm finding that that is not necessarily the case, that auditors do things differently. I always thought I was the crazy one when I did up my own books and the auditor looked at me, but I realize I was probably just as right as he was now.

It would appear to me that there would be a great benefit to the Department of Education - I don't mean to put Mr. Berniquez on the spot again - from the Department of Education and the Auditor General's office if there was a standard system in place. It would be much easier then to compare one board with another.

MS. MARSHALL: There are two aspects to it. One is the way the assets are recorded on the financial statements. The Department of Education had issued some guidelines on that, but we had noticed during the course of our audits that not all the school boards were following the policies and procedures with regard to recording it on their actual financial statements. The other issue is the control over the assets themselves, knowing where they are at and that they are properly controlled.

MR. CHAIRMAN: There are two separate issues here. The $92 million versus $203,000. Obviously you just didn't record as capital assets the value of all the buildings and property you had, only what was purchased that year and you were intending to pay off. That is just a different accounting system. But control over assets, as Mr. Crane pointed out, and as Ms. Clouter has indicated, you now have a system, or at least are proposing to put a system in place. I think that is the biggest concern that the Committee would have on this particular item.

Mr. Crane, I will put it back to you.

MR. CRANE: Yes, because if you had any write-offs or disposals of old furniture, you would have no way of knowing what was disposed of. If you didn't have any kind of a system in place, how could you figure what was wrote off or what was thrown out? It must be a real frustrating area to work in if you are trying to keep track of something when you have no way of doing it, right? That is the only thing. The fact that you are making an effort to get something in place is about all we can expect from you.

There is one other thing that struck me in the book as I read through it - and there are many other things - but there is one other thing. Can you give an explanation as to why the teachers payroll grants were deposited into operating expenses? We have done a couple of school boards and this is a new one on me, because I always thought that the government paid money to school boards for certain things and it was deposited that way, then why would you deposit teachers' salaries into operating account?

MR. CHAIRMAN: Mr. Butt.

MR. BUTT: The situation that Mr. Mercer described in the beginning of our session today shows us as a school board having considerable overdraft, and also being very, very concerned about interest charges and other types of charges that would be coming our way. When Mrs. Clouter was appointed business manager in this particular region, she asked a simple question as to why we would maintain an account with a positive balance all the time, and why we would maintain an account that had a negative balance all the time when the difference between the interest that you earn and the interest that you are charged would always result in your being overcharged at the same bank, and when the question was asked: Is there any particular reason why you have to maintain two separate accounts, and the answer was, that you can maintain a separate payroll account in order to be able to clear the payroll cheques efficiently, we would be going through probably 700 or 800 a month in that account, and we could not find any particular compulsion to hold the amounts in that particular account.

We held one general account which we were confident with, where we could operate our payroll account by means of transfer of funds into the payroll account, and in the early going we believe that that saved us thousands and thousands and thousands of dollars of interest in our basic operating; and we knew what our cash requirements were, we knew that we were capable of operating that way and it was not contrary to any of the Schools Act statements and we felt that it was good practice to do so.

MR. CHAIRMAN: Mr. Crane.

MR. CRANE: The Department of Education, do they send out, say, payroll cheques, salaries, an amount of money to cover payroll, do they segregate that or do they tell you to throw it all into one account? Is there anything within the department that says you should keep salaries separate from the general account?

MR. BUTT: We have a separate account for clearing the cheques, and they just simply ask us for an account number to which the amount is transferred.

MR. CRANE: Ms. Marshall, what do you see wrong with that?

MS. MARSHALL: Well I am looking at Section 12J of the Schools Act, which says that every grant received from the department should be expended only for the purpose for which it is made, and the payroll grant is given for that purpose, to pay the payroll.

Now if that grant is being mixed in with their operating funds and the operating funds is in an overdraft position, then obviously the grant from the teachers is being used, albeit temporarily, for general operating expenses, and I do not feel that is within the intent of the legislation.

Within government itself, for example, the government has payroll bank accounts and general operating accounts, and then for purposes of calculating interest expense the bank themselves net the various accounts and come up with the net interest expense for the government, and I would think the same could be arranged for the school board, but it is generally accepted practice that you would have a separate payroll operating account for your payroll cheques, and for your operating expenditures you would have a separate operating account.

MR. CHAIRMAN: Mr. Crane.

MR. CRANE: How do you accept the argument then, as Mr. Butt is saying, that they have saved thousands of dollars by doing just that? Is there an argument for that?

MS. MARSHALL: I think arrangements can be made with the bank for the bank to net your two bank accounts. The government does it that way, and I am sure that the school board could make a similar arrangement with the bank, but it provides for better control of your expenditures and also better control of your grants.

MR. CHAIRMAN: Ms. Clouter.

MS. CLOUTER: We do have a separate payroll account for teachers' payroll. The only difference, I guess, in any other board and pertinent to the act that Ms. Marshall is reading is that the transfer from the department, once the teachers' payroll is done, is transferred into our operating account. The bank has instructions where the payroll account is hooked to the operating and they just net it out, as she is saying, okay?

MR. CHAIRMAN: Mr. Butt.

MR. BUTT: Mr. Chairman, we have no concern that payroll cheques will not be honoured, and we do not believe that we are using payroll funds for any other purpose. They are just simply sitting in an account that has certain limits on it, and when the payroll cheques are cashed then monies are simply automatically transferred at the end of the day to cover whatever the balance was needed.

We felt it to be important to us to save $3,000 or $4,000 or $5,000 a year at a time when we were struggling to take care of high interest rates. We had high interest rates in 1989-'90, and we are struggling to eliminate the debt which had amassed between the two boards that were consolidated. We did all of it, and we find now that we are in a better position, that operating this way is actually very neat for us. It works well. We can clear all of the accounts. We do not have money sitting idle in an account drawing a few pennies of interest, and it works well for us. We have no real basic disagreement with the concept of holding two, but it achieves the same purpose.

MR. CHAIRMAN: Ms. Marshall.

MS. MARSHALL; But if you have combined - if you are using one bank account for your operating expenditures and also for your payroll expenditures, if you have gone into overdraft on your operating expenditures then effectively you are using your payroll grant to fund your operating expenses until you go back into a plus position in your bank account, so you are temporarily borrowing from your payroll grant to pay your operating expenditures.

MR. CHAIRMAN: Ms. Clouter.

MS. CLOUTER: We do have two separate accounts.

MS. MARSHALL: You do?

MS. CLOUTER: We have an operating account and we have a payroll account.

MS. MARSHALL: Okay.

MS. CLOUTER: The only difference is that when the grant is transferred to our bank account it is transferred to our operating. The bank, in turn, transfers it to the payroll account.

MR. MARSHALL: The entire amount?

MS. CLOUTER: Yes.

MS. MARSHALL: So you are not using your payroll grant for operating expenses, for general operating expenses?

MS. CLOUTER: If you went back through the records it would be very difficult to determine if the payroll amount had been used at any point in time to pay an electrical bill or whatever. Especially this year. Because we have not run into a line of credit (inaudible).

MR. CHAIRMAN: Mr. Crane?

MR. CRANE: Yes, go ahead.

MR. CHAIRMAN: I wanted to make one comment here. As I see it, the money is being used for payroll purposes.

MS. CLOUTER: Definitely.

MR. CHAIRMAN: You are borrowing from it from time to time to reduce the amount of interest you would pay on overdraft for your operating account. I don't see that, quite frankly Ms. Marshall, as using payroll grant for other purposes. I see it as borrowing from yourself, which is good management of available resources on the Board's behalf. The only argument I can see with it is that if that payroll money were in a payroll account and earning interest there would be more interest available for payroll. So whatever small difference that makes, there is an argument that the interest that would have been earned by that payroll money which was given in advance by government should be used for payroll purposes, and I guess it is a policy decision of whether you need additional teaching staff or you need that money to help with your operating costs. It is a fine point here.

MS. CLOUTER: Mr. Chairman, we consider it good financial management to do it the way we are doing it. I have no concerns with it. I don't think there will ever be a time when a teacher's payroll cheque will not be cashed as such, because those accounts are hooked directly together.

MR. CHAIRMAN: I was going to ask the Auditor General, if there was one account - I appreciate your argument that there should be two, and I agree with that - if there were one account, and all funds were put into one account, and the payroll cheques were paid and the operating expenses were paid, would you then consider that you were borrowing from the payroll account? How would you know?

MS. MARSHALL: No, but the problem that they experienced was in previous years they have gone into an overdraft position with their bank account. So, because it is in one account, they are effectively borrowing from their payroll grant. In my opinion that is not in compliance with section 12 of the Schools Act.

MR. CHAIRMAN: You would rather they borrowed from the bank and paid a much higher rate of interest than they would have earned from the money that is sitting in the payroll account, (inaudible) the bank?

MS. MARSHALL: No. I mean, you can have two separate bank accounts, and your payroll account will be in a positive position, and your operating would be in a deficit position, but the bank, as a service to their customers, should be able to, for the purposes of calculating interest expense, net the balance in the two accounts. The government ledger does it that way.

MR. CHAIRMAN: Will the bank do that?

MR. FINN: Mr. Chairman, if I may -

MS. CLOUTER: The interest on an overdraft account would be much higher than it would be on a positive account.

AN HON. MEMBER: That's right.

MR. FINN: Mr. Chairman, if I may. I would just like to comment. I think what the Board has been doing in that respect is good, prudent use of government's monies, and also assists the Board in reducing the amount of interest charges.

MR. CHAIRMAN: I would tend to agree.

MR. CLOUTER: Mr. Chairman, a check on any businesses in this area or any other area in the Province, would show that that is a routine practice in all businesses.

MR. CHAIRMAN: What we are caught up in here is a strict interpretation of legislation which says this grant is for payroll purposes and should not be used for anything else. It is not used for anything else, (inaudible) used for payroll. It is borrowed temporarily, and there is where we find there is a fine line there.

Ms. Marshall.

MS. MARSHALL: I still maintain my position.

MR. CHAIRMAN: I'm sure you do.

MR. BUTT: Mr. Chairman, I have difficulty with the term borrowed. Because I think it is the account in which the money is received. I would draw a comparison that if in fact your school board was large enough where you operated with, say, two or three different banking companies, and if you received, let us say in your head office at the Bank of Montreal but teachers were going to hold accounts in the Bank of Nova Scotia in another community, you would receive your payroll into a particular bank account and disburse it according to where it was going to be used and I don't see that the idea of borrowing is not what we are intending there; it was simply to have a place in which monies that the board was owing for all kinds of purposes, bussing, special operating grants, salaries, whatever, whatever grants the board was owing were received into one account and then disbursed according to what was required on a day to day basis.

MR. CHAIRMAN: Thank you, Mr. Butt. There being no further submissions to this particular item, Mr. Langdon, would you like to carry on?

MR. LANGDON: As a note about what was said so far, before I ask a question, it seems to me, that what we have is an act by the Department of Education and the school board is looking at the act and saying: well, okay, there are ways and modifications that we can use to better the system and you are doing it. Now, whether that is right or whether that is wrong on the school board's part is open for interpretation, because, if everybody were to do the same thing, and I am not sure what type of a situation we find we have, but I leave that with you guys.

One of the other points with the conflict of interest guidelines that you had on page 169, the Auditor General was concerned that a member of the board who serves as chairperson of the operation and maintenance committee is also associated with a couple (inaudible) who bid on contracts with the school board, and we note that this company was not successful in its bid, however, we also note that we could not find any evidence that the member exempted himself from pre-contract discussions relating to the tender, and my question to you is: has this changed or is this a different policy, have you made corrections to eliminate that?

AN HON. MEMBER: We do have a policy now on conflict of interest and the situation has changed.

MR. LANGDON: So that he is no longer able to participate?

AN HON. MEMBER: The member has resigned.

MR. LANGDON: Okay. Also, on page 119: Appalachia Roman Catholic School Board, Administration Expenses ending June 30, 1992. If you look at item No. 025, Board Meeting expenses, it went from $16,872 in '91 to $38,950 in '92; could you give us some reason why that account more than doubled? Were there twice as many meetings or whatever?

MR. CHAIRMAN: Mr. Butt.

MR. BUTT: Obviously, we would have to actually pull that particular year to examine what we are talking about, but if you remember, that was the year in which the Royal Commission on Education Report was done and we did find ourselves in that particular year into a lot more discussions, meetings, provincially and nationally that were related to school board business, so the amount that is there could represent extra initiatives that came as a result of the consolidation of the boards, and also other demands that were put on the trustees from a provincial perspective.

I think that that was also the year in which there was a national event held in St. John's I believe, and it was held within the school year which operates from July 1 to June 30 of a particular year. Also sometimes there are some events that would happen on July 1 in our second budget year but I remember that year an event held in St. John's was held within another budget year which actually doubled the expense for one particular national event that the board normally attends, and that would be the Conference of Canadian School Boards which was held in St. John's, so that year there were two of those in the same fiscal year that this board participated in that could inflate figures a bit, but other than that, we found over the last two years that there are a lot more demands on trustees in this Province, tremendous more demands, and this refers to trustees, not to staff.

MR. CHAIRMAN: Mr. Langdon?

MR. LANGDON: Would that also be the reason for item number 35 Special Events, amounts doubled as well? Would that probably be related to number -

MR. FINN: At that time I think we had one of our new schools opened and of course during those proceedings there was some cost involved in opening the new school here in town, the primary school, Cassidy, which is a joint services school.

MR. CHAIRMAN: While we are on that page, maybe if I could just ask about item number 18 there, Bank Charges, decreased from $78,000 in 1991 to $12,000 in 1992.

MS. CLOUTER: Mr. Chairman, that proves the point that we were just talking about.

MR. CHAIRMAN: I was wondering, I am trying to give you an opening.

MS. CLOUTER: It also shows what (inaudible) over that period of time.

MR. CHAIRMAN: Ms. Marshall.

MS. MARSHALL: But that was also as a result and you said that your bank overdraft has declined in that the Board has a better financial position so I would say that would be the primary reason for that. That was (inaudible) financial position.

MR. CHAIRMAN: So there is nothing unusual here, it is just that the situation is improving and you saved some money in interest, a very significant amount of money.

AN HON. MEMBER: A good story, Mr. Chairman.

AN HON. MEMBER: We retired well over $1 million worth of debt in the first three years of operation of this school board.

MR. CHAIRMAN: Extremely good.

We normally stop for a coffee break around now, do we want a coffee break or due to the fact that Mr. Mercer has to leave shortly, do we agree to carry on?

Mr. Dumaresque?

MR. DUMARESQUE: I wanted to ask a question on the revenue side. This is a question that came up in a previous school board meeting - now it is not on any of the pages - I am dealing with the revenue side on pages 117 and 118. I know other school boards in the Province charge certain fees for locker rental and other things in the school that students pay for, I am just wondering if you charge any of those fees that students pay and if you do, where they might show up in the revenue side of your ledger?

MR. CHAIRMAN: Mr. Butt.

MR. BUTT: Mr. Chairman, all of the things contained in our audit are things which the school board itself would have covered under its umbrella mandate. Items that are specifically related to school revenues and expenditures are handled in separate accounts related to that particular school. We do hold responsibility for those and we do audits on our school accounts. So any item like that, that a student would pay, would be paid into a school account and then that particular account would have its own set of records.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: So do you have any idea of the amount of money that we are talking about, from all of your schools, that would be collected by these other fees and set up in these accounts, and what kinds of things would these monies be used for?

MR. BUTT: Mr. Dumaresque, to answer that question we would need to take a particular school's records and pull off the answer to that question on both sides of it, both the revenue side and the expenditure side, but we do have it and every year a school is obliged to supply us with a statement of account which includes the revenues and expenditures.

MR. DUMARESQUE: That is my point, I guess, that you do have it and you are obliged to be told about it, but from what I see here the public, John Q. Public, does not see what revenues are created in that way, or what net revenues are derived, if any. There may not be any, but that is one of the concerns that has been raised to me in the past, that these fees are going up year after year to these students, and parents are saying that when they ask school boards how these fees are spent, and where they are showing up in the ledgers, they are not able to get the answers.

I guess some people feel that this money is very discretionary, and while these monies are discretionary you are still getting the same students going around to the doors asking for the purchase of various other things, for paper and for other minor purchases in the schools, and there seems to be a question in the public's mind that I think would be properly addressed if you were to show that your schools raised so much revenue on your revenue side, and the same thing on the expenditure side, in your statements here.

MR. BUTT: We have begun to move towards the establishment of finance committees in all of our schools which would have parent representation on them, and to date every school has established a finance committee, and while not every school has parents on them, they will eventually. So any type of, I guess, request that would come from the public will have a way of getting an answer to that question.

We would hope also to get to the point where schools will publish, the same as we do, a financial statement of what monies were taken in, and how they were taken in, and how they were spent. We believe we are moving in that direction and we will have it becoming standard practice in time.

We do audits on all school accounts, and those are done in a way in which we expose as much as possible to what the figures are, and it is our desire, really, that they would be more open.

MR. DUMARESQUE: Okay. Well, would you provide certainly myself, as one member of the Committee, with a list of the schools and the information that they submit to you as to what money they do raise and what money they spend, if it is a positive or a negative, and maybe some idea of the type of things they spend money on.

Maybe I could ask the Auditor General, on that item: are you aware of these accounts being there at the school level? Would they come under your guise as you go through your accounting and auditing process?

MS. MARSHALL: We know that they exist, but no, we haven't conducted any audits on them. I have just mentioned to Mr. Janes to make a note of it to consider it for inclusion in a revision to our audit program.

MR. DUMARESQUE: That puts me onto another question to you, I guess. As you know, earlier when you made your first submission you did not audit the transportation side of the School Board's accounts. Was there any particular reason why that wasn't done?

MS. MARSHALL: When we commenced auditing school boards about two years ago, we started out with financial management and fixed assets and purchasing, and we have now expanded into busing, transportation grants. The last audits of two school boards that we did did include looking at that area. So those items would be included in my next annual report to the House of Assembly.

MR. DUMARESQUE: Thank you very much. That is it for me.

Now that I have assumed the Chair I will transfer it to Mr. Penney.

MR. PENNEY: Thank you, Mr. Chairman. A couple of questions for clarification. If you would turn to page 18. No, I think that's wrong. I think there are several page eighteens. I'm looking at the wrong one. It is part of the 1991 financial statement.

AN HON. MEMBER: Seventy-eight.

MR. PENNEY: Seventy-eight? That wasn't the one I was referring to but that was one of the questions as well. You will notice there that there is a notation: Reserve Account - Capital. A minus figure of $1.077 million. Then there is an explanation, note 5. That is on page 85. When I turn to that one the page is blank. Could somebody explain to me what that is all about?

MS. CLOUTER: If you look at page 86 you will see it.

MR. PENNEY: Page 78, Reserve Account - Capital. The explanation for it is on page 85, supposedly.

AN HON. MEMBER: The explanation I guess is on page 86, Mr. Penney.

MS. CLOUTER: Again, it just relates back to the fixed assets not being recorded on the financial statements.

MR. CHAIRMAN: Ms. Marshall.

MS. MARSHALL: I think, Mr. Chairman, one of the figures doesn't belong there.

MR. PENNEY: If you go back to page 78, if you were to try and

resolve those totals, the total board equity is minus $1.161 million, but you have already, minus $2. something if you add them together. I think Ms. Marshall, one of those figures probably should not be there.

MR. CHAIRMAN: Ms. Clouter.

MS. CLOUTER: Well again, the problem is the investment capital asset at the top of page 86 is in a minus, which goes back to the fixed assets not being recorded on the statements in that particular year. If you go to the next year, you will see that fixed assets have been recorded of $38 million.

MR. PENNEY: Yes, so you do not see a problem with your balance sheet on page 78?

MS. CLOUTER: There was a problem in that particular year and again, it was the two boards coming together and as a result of the two statements coming together, it created this problem.

MR. PENNEY: Ms. Marshall, from an accounting point of view, does that look okay to you?

MS. MARSHALL: I am trying to add it but I don't think it adds.

MR. PENNEY: I don't think it adds either.

MS. MARSHALL: I don't think it adds; I am just trying to -

MR. PENNEY: While she is doing that, the other item, I haven't found it but there is a notation called miscellaneous and then it says Pathfinders $172,000, I am just wondering what that was?

MS. CLOUTER: Pathfinders, Mr. Chairman, is a computerized project we are running in the Appalachia Board and is funded by CEIC projects.

 

MR. CHAIRMAN: So there is revenue against that, is there, from CEIC, total?

MR. BUTT: Yes. To be very specific, it is a program which is funded under youth strategy, with contributions from the Sisters of Mercy and the Presentation Sisters to get started, plus contributions from the School Board which is aimed at heading off potential dropouts within the school system and giving them an alternative from I guess, the regular school routines, and it is a very high-cost item; it involves a computer network of ten computers with a pretty expensive software package that individualizes the program which the students get and we feel it to be something that is highly effective in dealing with older teenagers who require additional programming within our area, and if you refer to our annual report you will find a section in there which explains that and tells you what the latest development is on that, and certainly, if you are interested, that is a project that I will be only too happy to take you on a tour of,if you have the time.

MR. PENNEY: So there is a corresponding revenue (inaudible) dollar for dollar?

MR. BUTT: Yes.

MR. PENNEY: Okay. Mrs. Marshall, have you -

MS. MARSHALL: (Inaudible).

MR. PENNEY: Pardon?

MS. MARSHALL: It does not add.

MR. PENNEY: It does not add?

MS. MARSHALL: No, it does not add.

MR. PENNEY: And is it out by that figure?

MS. MARSHALL: Yes, that is what it is out by, you just have to remove the second, 1,077,547.

MR. PENNEY: So that second 1,077 really should not be in there?

MS. MARSHALL: I don't think it belongs there, no.

MR. PENNEY: Well, aren't those financial statements sent to the Department of Education for some kind of scrutiny or evaluation, prior to your having seen them?

MS. MARSHALL: Yes, Mr. Berniquez, could probably speak to that, but yes, they go to the Department of Education for review and assessment and comparison among the various school boards.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: I am hoping I have my page numbers correct, so that we do not have any unnecessary inconvenience. Page 5, Board owned buses purchased from the Port au Port Roman Catholic School Board are recorded as assets and are being amortized over the repayment period; buses which were purchased by the Bay St. George Roman Catholic School Board are not being recorded as assets and are not being amortized, could you explain?

MS. CLOUTER: Again, that would be two boards coming together, one board had one way of doing it and the other board had another way and that problem has been corrected. They are recorded now.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: Page 9: We recommend that the board verify the enrollment figures on the annual general returns before they are submitted to the Department of Education, et cetera, and the Boards response; this recommendation will be examined and some accommodations should be able to be made. Could you tell us what has happened in that regard?

MR. CHAIRMAN: Mr. Butt.

MR. BUTT: Thank you, Mr. Chairman. This point has been raised by the Auditor General on a number of occasions with other boards and as I understand the situation - and Ms. Marshall can correct me if I am wrong - the intent with that particular recommendation was that since the school board revenues and allocations are so driven by the number of pupils that are contained in our schools that there ought to be some way of ensuring that people aren't fiddling with the figures and that they don't end up with numbers being reported that are inaccurate or have, I guess, not been verified in some way. Am I correct in that?

MS. CLOUTER: Not so much as fiddling with the figures but the information is coming from quite a number of schools throughout the Province and then up through the system into the respective school boards and then on to the Department of Education. I think there should be a system in place to ensure that all schools are accumulating this material or this information in the same fashion and then when it goes to the school boards, the school boards are using the same process to do what they have with the information and on to the Department of Education. Just as an example, part-time students, are they always included as a full time student in all schools for the purpose of generating the student enrollment figure? It is that sort of thing that I would like to see clarified to ensure that all the schools are accumulating the information in the same fashion.

MR. CHAIRMAN: Mr. Butt.

MR. BUTT: Mr. Chairman, in answer to that question, it was my belief that we are in fact verifying figures as we go through the years. In fact, I will table with you samples of the work which we do, where we do enrollment projections, where we do class size monitoring and all kinds of things of that type that are done independent of the collection of data related to the student numbers on the annual general return which is counted on a particular day in the school year, it has to be counted on September 30, all throughout this Province.

In my work day to day with the school system, the assistant superintendent's work, the business manager's work and the person who handles furniture for us, we are all concerned with the number of children who might be in a particular classroom at a time. So when looking at this one, we examined what it was that we were being asked to do. While it will take some looking at to determine whether or not we have a proper verification procedure in place - and I would certainly be willing to talk to Ms. Marshall about that and will table with you supplementary reports which are generated independently of the annual general return - which verify the numbers that are contained because they are done at different times during the year and that would just simply allow for a drop-out or two that we would experience in a year. So I can understand the concern. I believe that one is being met and that at any particular time we can feel secure that the numbers which are being used do have checks on them and that they are accurate within the system. If there is some other system which might be recommended, then I would suggest that it would need to be a provincial recommendation as opposed to what would be done in a particular school board to settle this problem. I table this with you for your consideration in relation to that particular comment.

MR. CHAIRMAN: Thank you.

Mr. Penney.

MR. PENNEY: Mr. Chairman, before Mr. Mercer leaves, one question. I ask it now simply because I respect that you have to go. I go back to the very first question I asked here today as it related to the travel expenses and per diems.

One of the recommendations that was made by the Auditor General in her report, and I will quote it verbatim, from page 7: "We recommend that the Board adopt travel guidelines similar to those followed by government departments under the direction of Treasury Board. These guidelines should be consistently applied for all officials of the Board."

Recognizing what has been said in reply to my questions earlier today I will ask you at this time, are you prepared or willing to comply with that recommendation from the Auditor General's office?

MR. MERCER: I guess I can speak on behalf of the Board, Mr. Chairman, and say that we are certainly willing to sit down and discuss that with the executive and bring the Auditor General's recommendation to the Board and discuss that further.

MR. PENNEY: Very well. Thank you very much.

MR. CHAIRMAN: Mr. Mercer, before you go, thank you very much for being here, for participating in the debate. We are pleased with the cooperation we have received from the Board and understand you have to leave.

MR. MERCER: Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: I just have one final question. It came up before on school boards again, under Special Events on page 119. That $4,285, is that for a retirement party?

MR. BUTT: That would be any event that the Board itself would authorize. I guess the practice of the Board would be to hold a dinner at the end of the year for retiring teachers, caretakers, secretaries, any of the people who would be leaving the employ of the Board. It very well could be in there, yes.

MR. DUMARESQUE: Just for our information, I guess, again. You have a retirement party every year. We know that in other school boards they also paid the complete meal and accessories for everybody who attended, not just the retirees. Is that the same practice as you follow?

MR. BUTT: Yes. The invitation list would be the executive of the school board, the retirees and a guest, and only representation from senior management.

MR. TOBIN: If all the teachers in that school decided to attend, I mean, they would pay their own way?

MR. BUTT: No. There is an invitation list, and it is extended to six members of the executive of the school board and, I believe, six members of the executive staff, and then the retiree and a guest.

MR. DUMARESQUE: It wouldn't be like the one in St. John's, I guess, where there were 30 people retiring and 225 people actually attended the retirement party, and it all got paid. It wouldn't be anything of that nature.

MR. BUTT: No. The guest list is limited. It happens in the month of June for those people only who are retiring and to be recognized for their service. On behalf of the board, they would receive a simple retirement plaque and the occasion would be a simple evening of a couple of hours, with a catered meal.

MR. DUMARESQUE: Thank you.

MR. CHAIRMAN: Thank you, Mr. Dumaresque.

Mr. Crane?

MR. CRANE: I have no further questions.

MR. CHAIRMAN: Mr. Langdon? Mr. Penney?

MR. PENNEY: Just another couple of questions, Mr. Chairman. I would like to go back to the remuneration of pay lost when board members have to attend meetings. Could you give us some idea just how many days of salary remuneration there would be over a year? First of all, how many board members are there?

MS. CLOUTER: Eighteen. We had eighteen of them.

MR. PENNEY: Eighteen?

MS. CLOUTER: We are down to sixteen now.

MR. PENNEY: Approximately how many days per year would those people be expected to attend meetings with loss of their regular pay?

MS. CLOUTER: Mr. Chairman, I wouldn't be able to put it in days, but I can tell you the dollar figure on it.

MR. PENNEY: Okay, that was my next question.

MS. CLOUTER: In one particular year we had $3,000 budgeted for it, and I think we may have used $2,500 of the budget amount.

MR. PENNEY: So it is only $2,500 for the year.

MS. CLOUTER: For the year - a very minimum amount.

MR. PENNEY: Because I'm looking at page 188 where it says: regular business meetings of the association, six days a year; liaison meetings with the Minister of Education, three days a year; attendance at provincial/national seminars, five days a year, et cetera. The total is twenty-two days.

MS. CLOUTER: Yes, but you would have only one or two trustees attending one or two functions during the year.

MR. PENNEY: Fair enough. When you look at that, the first reaction is to take twenty-two days and multiply it by the number of board members and if you multiply that by what one would consider to be an average income, it is a lot of money. But when you say it is only $2,500 that is a considerable difference from what I had envisioned.

MR. BUTT: It is used if a person who is an elected trustee or a appointed trustee is required to actually officially represent the school board - that would be like today. There would be some difficulty with arranging time off, let's say during the daytime, to have this meeting when the trustees would normally meet in the nighttime and on weekends to do the ordinary business of the board.

MR. PENNEY: Yes. One last question, unrelated to anything that I have seen in this report. Does your board provide computer software for library management to the schools? Could you tell me what brand you use?

MR. BUTT: We have, this particular year, approved one pilot project at St. Stephen's High School to use the Molly system.

MR. PENNEY: How much did you pay for the Molly system?

MR. BUTT: We paid $3,000 or so.

MR. PENNEY: So you just have the one package?

MR. BUTT: And we are piloting it in the largest school we have to determine whether or not it is the system we feel is going to be best for our school system.

MR. PENNEY: So there was only one package of software purchased?

MR. BUTT: Yes, at this time.

MR. PENNEY: Thank you very much.

MR. CHAIRMAN: There is just one item that I want to bring up here as relates to public tendering and the hiring of consultants. The booklet tells us that there were no policies in place dealing with the selection of consultants, and of greater concern to me was that tenders, in many cases, were called and dealt with by the consultants and the board advised to whom the consultant had awarded the tender. That seems to be an unusual practice. The consultant, obviously, is an advisor to the board, but it certainly didn't indicate any control over the tender procedures, confidentiality, and the whole question of conflict of interest that was raised earlier. Can you tell us what you have done, since the Auditor General's report, on that? Have the procedures changed?

Mr. Butt.

MR. BUTT: Mr. Chairman, at that particular time when the audit was being carried out, there was considerable debate about the engagement of a consultant to do, I guess, the design and the on-site inspection and so on of a major project which we had coming up. What we had done at the time was call for proposals from consulting companies to submit their packages and tell us what they could offer us, what their fee structures were and so on. Actually, that is what has been the practice with all major construction contracts, to call for proposals and evaluate the proposals to determine which consultant would be used on a particular project.

I guess, the particular reference here to consulting and awarding contracts, under construction projects of that type, the consultants would prepare all the tender documents and ensure that all the specifications were within appropriate limits for Canadian standards, fire commissioners, all those kinds of things, and on our behalf, would be a place to receive the bids. They would evaluate the bids and make a recommendation to us, and we would, in fact, award a contract to a construction company to complete an extension or to build a new school. So it is not really accurate to say that the consultants were awarding the contracts. They made a recommendation to the board as to whom they would recommend as the company who would get the bid, and in all instances that I have been associated with in this area, they have recommended the low bidder.

Further to that, the Auditor General made a recommendation that we consider the guidelines that are adopted by Treasury Board for the hiring of consultants, and those were tabled and discussed at a finance committee meeting, and we are continuing to, I guess, use the same procedure. We have so few major construction projects that this is going to come around once every two or three years, that we would actually have to engage a consultant to do this work for us. So that is a procedure that we use and we believe it does work efficiently for us, but we still make the decision based upon recommendations. The consultants also were required to insure that the Public Tender Act is followed, that the POA allowances are right and so on; they do all that work for us.

MR. CHAIRMAN: Well, that is the question, are they doing that, in fact? Let's get back to your hiring consultants again. You are now following Treasury Board guidelines for the selecting of consultants?

MR. BUTT: Well, we had some difficulty with knowing how they would apply to us and they are still around. For instance, the Treasury Board guidelines would give certain limits on who can engage consultants within the public service and we have an all or none situation. If we are ready to engage a consultant for a construction project, then the board decides. So I do not have the authority to engage consultants to design a school building, let's say. The board would make that particular decision and that would be as a result of calling proposals.

MR. CHAIRMAN: (Inaudible) the board make the decisions.

MR. BUTT: Calling proposals -

MR. CHAIRMAN: On the proposals.

MR. BUTT: - and the proposals then would be evaluated by the finance and property committee of the school board and that committee would make a recommendation to the whole board to engage a particular consulting company.

MR. CHAIRMAN: Okay. You get into the construction project, various tendering activities are involved with the construction project. Who conducts the tender call?

MR. BUTT: Consultants call all the things associated with running that particular project. And there is only one tender call, by-and-large, and that is the tender for the whole project. If we have furniture that we wish to purchase, we will tender the furniture ourselves.

MR. CHAIRMAN: Okay, so the consultant calls the tender, the board makes the final decision based on the recommendation from the consultant. Normal purchasing practices, you invite tenders, what is the procedure used there?

MR. BUTT: The procedure would be, first of all, to determine the -starting off with the budget that is allocated for a particular item. For instance, right now we have just finished calling tenders for computers. We have a computer specialist who decided on the specifications of the equipment we were going to purchase; we decided on the quantities that we were aiming for and the outside limit on the numbers of dollars we wanted to spend. We called the tenders, received them in our office, they were evaluated by the business manager and the specialist in that particular field, and then you arrive at the - hopefully, the bidder who meets all of the specifications and is able to, I guess, meet the requirements of the tender call; and, as I said, in all cases, the focus is on the low bidder, to see whether that person is capable of meeting all the requirements of the tender call.

MR. CHAIRMAN: So the Public Tender Act is followed and -

MR. BUTT: We believe we are following the Public Tender Act all the time and that is why, when these types of questions are raised, we take them seriously and consider them to be anomalies that we will correct and will not knowingly, subvert the system, because actually, it will cause us much more difficulty to do it differently than it would be to follow the letter of the act.

MR. CHAIRMAN: Not an option that is available to you either.

MR. BUTT: Right, besides that, yes.

MR. CHAIRMAN: Let me ask you this: When the tenders are received in your office, are these sealed tenders, opened publicly and subsequently analysed?

MR. BUTT: Yes, and we have such things as not receiving tenders by fax and so on, that they are all supplied to bidders as part of the thing. We develop a package and people will have to ask us for the package if they want to bid on the items we will offer for tender; but it is sealed, opened at a particular time, opened in public. The bids are documented, signed by the people who are there witnessing the opening of the bids, and usually within a week or ten days we will send around to the bidders our evaluation of the bids, based upon the specifications which we have set.

MR. CHAIRMAN: So there appears to be a considerable improvement from two years ago?

MR. BUTT: Well, I believe that our procedures, even two years ago, were good, and while we have learned from the things which were pointed out to us by the Auditor General's staff, and where we felt there was a weakness, we are certainly making sure that we do not fall into those types of situations again.

MR. CHAIRMAN: Do the members of the committee have any further questions?

Ms. Marshall, do you have any final comments, or anything you wish to offer at this time?

MS. MARSHALL: No, I don't, Mr. Chairman.

MR. CHAIRMAN: Thank you.

Mr. Butt, do you or anybody else from the board have any final comments or observations you wish to make?

MR. BUTT: Just a final comment, Mr. Chairman, if you will.

We supplied you with a copy of our annual report, and I think that while you have focused on the issues related to the Auditor General's Report, that our operation is a very, very broad operation that we would certainly like to make members, I guess, aware of, in terms of the service that we are delivering, the quality of that service and the commitment of the people who are delivering the service.

I would certainly welcome any member of the Legislature who is interested, after you look at our report, to get to know us in a different light from that of the types of issues which, I guess, have appeared in the report, because we have, I think, a lot that we are offering to the children in this area, and since you will also be, I guess, very important people when it comes to the determination of the education dollar, you should have some feeling as to the kind of education that children get under our particular jurisdiction. We would certainly welcome you to participate in our district's activities, and I would be only too happy to show you through some of the very exciting projects which we have ongoing.

MR. CHAIRMAN: Thank you very much, Mr. Butt.

On behalf of the committee, let me assure you that both the committee and the House of Assembly generally are most interested in the education of our children and the service that school boards, and people who volunteer on those boards, as well as the professional staff, give to our Province and the young people of our Province.

In my own view, what I have heard here today is that you have made considerable progress in the last two or three years since these two boards have amalgamated, and with the comments of the Auditor General and the assistance of the Auditor General's department and the various guidelines that are laid down by government, I think we will see a different audit statement in future, no doubt.

I want to thank you all, on behalf of the committee, for attending here today, for giving us the benefit of your expertise, experience, in this particular item, and we wish you well in your work on behalf of the young people of this particular region of our Province. Thank you all very much, indeed, for being here.

That ends the debate on this particular item. There are one or two brief items that I need to discuss with the committee. The witnesses may feel free to withdraw, if they wish. Again, we thank you for being here.

Before the Auditor General and her staff leave, there is an item dealing with the Twillingate hospital.

AN HON. MEMBER: Mr. Chairman, if I may, I would like to pass out our copies of the tendering.

MR. CHAIRMAN: Thank you; please do.

MR. CRANE: Mr. Butt, before you go, how did you come up with the name for the school board? What does the name mean?

MR. BUTT: Well, it refers to the mountain range that covers almost all of eastern North America, and would start in Labrador and move through to all of the Island of Newfoundland down through to the eastern States.

MR. CRANE: Why did you pick that name? It really fascinated me to see the name for the first time, and all the way out I was trying to find a reason why you came up with a name like that.

MR. BUTT: Well, it refers to the mountainous area, and it seems that every school in our district has a mountain behind it and it was suggested by a student in Stephenville Crossing.

MR. CHAIRMAN: I am curious about the spelling - I always thought that Appalachia was Appalachian.

AN HON. MEMBER: There is also an Appalachia.

MR. CHAIRMAN: Thank you, Sir.

Just to continue then briefly, if I may, with the committee - the item dealing with the Twillingate Hospital which the committee referred to the Auditor General some time ago and asked that the department do a review of that particular hospital board. The Auditor General was asked for some direction in that regard and a resolution from the committee. Since the request was simply a letter from me to the Auditor General - and that is not good enough. I don't have any authority, I am just a Chairman of meetings, and the board must make a resolution to ask the Auditor General to deal with that. To what degree, I am not - I guess my question, first of all, to the Auditor General is, Do we need a resolution? I think what the committee assumed was that we could say to the Auditor General, `Look, here is an area where there was some concern expressed, why don't you go in and do an audit? Let's see what you find before the committee goes any further.' In that regard, I would have thought that the Auditor General had the authority to go and deal with any school board, hospital board or any other agency. I will just ask her advice on that.

MS. MARSHALL: Mr. Chairman, the legislation under which my office operates requires that if I do work for the Public Accounts Committee, it has to be by resolution of the committee.

MR. CHAIRMAN: Well okay, the committee is asking you for it but you do have the authority to go in and do an audit anyway.

MS. MARSHALL: Oh, yes.

MR. CHAIRMAN: I think that is what the committee assumed - which was to suggest to you, why don't you do it? But I don't have a problem with this if the committee will agree. May I have a motion that the Auditor General be asked to do an audit of the Twillingate Hospital Board and report back?

AN HON. MEMBER: Seconded.

MR. CHAIRMAN: Carried.

MS. MARSHALL: Is there any particular area that you want looked at or is this something you are going to leave up to the office?

MR. CHAIRMAN: The area, as I understand from a letter, the item was referred to us, as you know - you have a copy of the letter, I think, from the Minister of Fisheries to us, suggesting that there is some concern in that particular area and that perhaps the Public Accounts Committee can look at it, the committee can say, `Well, we don't have any expertise to look at that.' Perhaps we should ask the Auditor General, first of all, to do a financial audit and see if there are any difficulties in those areas and, in the course of that audit, particularly look at financial management and controls down there and give us your advice as to any weaknesses you may perceive. You may or may not want to recommend to the committee that there are items of concern that we want to look into and actually follow through with the hearings or you may say there are normal problems here but nothing that requires the attention of the committee.

MS. MARSHALL: Okay.

MR. CHAIRMAN: Am I reasonably expressing the views of the Public Accounts Committee?

AN HON. MEMBER: Yes, I think so.

MS. MARSHALL: Okay, so what I will do, then, is commence with management practices and expand out into certain areas as I see fit?

MR. CHAIRMAN: Yes.

MS. MARSHALL: Okay.

MR. CHAIRMAN: Okay, thank you very much.

The only other item I have for the committee is one which is normally carried at an in camera meeting but I think we can do it here. We have one item left on our agenda which is Memorial University, about which we have had many debates. The House has dealt with it and told us now that we don't have the authority to call the University and that we should go through the Minister of Education. So I assume we want to do that, to arrange a hearing and invite the Minister of Education to come and deal with the accounts of the University.

Can we arrange a time for that? I guess, Mark, it will take some time to put the information together.

MR. NOSEWORTHY: A little bit of time. I have already contacted the Department of Education and have received some information back on the financial statements and some external auditor's reports which Mr. Berniquez supplied to me.

MR. CHAIRMAN: So it is not going to be possible to do anything, obviously, before the House opens. We don't know when that is yet, do we? Does anybody have any idea?

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Within the next two or three weeks, for sure.

MR. NOSEWORTHY: There is still some information that I have requested which I don't yet have, but he indicated to me that it will be forthcoming.

MR. CHAIRMAN: Okay. So anyway, we have requested the information and when we have that information, when Mark is able to advise us that he has enough documentation ready for us, then we can choose a time, perhaps during the Easter recess or even while the House is sitting. There is nothing stopping us from doing that, although we are all so busy with other committee work when the House is in session that it is pretty difficult to deal with it. The Hansard people are pretty busy and everything else. We can certainly do it early in the spring, although we will have another report I would think, Ms. Marshall, from you, shortly.

MS. MARSHALL: Yes, it is with the Speaker and it will be tabled as soon as the House is opened.

MR. CHAIRMAN: As soon as the House opens.

MS. MARSHALL: With regard to Memorial University, I did not carry out an audit last year. As you know, I had problems getting into the University.

MR. CHAIRMAN: Yes.

MS. MARSHALL: I am presently having discussions with Dr. May. It is my intention to go in and commence an audit within the next two to three weeks. Now, whether or not -

MR. CHAIRMAN: Are you suggesting, that maybe we should wait until you finish this audit, say, until next year?

MS. MARSHALL: No, I'm not suggesting that. I'm saying that, just for the information of the committee, I am attempting now to commence an audit of the University. I am not in there yet, but there is dialogue ongoing.

MR. CRANE: But if you get in there -

MR. CHAIRMAN: Nevertheless, there were a lot of items of concern that you expressed last year, that were referred to committee and that we wanted to get into. We can proceed. Mark will continue to get the information together and then, sometime in the next two or three weeks or a month, we will set a meeting.

MR. DUMARESQUE: Yes, we can certainly meet while the House is sitting and establish a meeting time.

MR. CHAIRMAN: We can have a meeting of our own, by all means.

There being no further business, I would welcome a motion to adjourn.

The committee adjourned to the call of the Chair.