Money-losing Crown corporation gets scathing review from auditor general

A money-losing Crown corporation has promised Transport Minister Marc Garneau it will clean up its act after Auditor General Michael Ferguson's office found "significant deficiencies" in the way it was being run, CBC News has learned.

The Atlantic Pilotage Authority (APA), which provides pilots to help ships navigate harbours throughout Atlantic Canada, has posted operating deficits three out of the last four years, with expenses exceeding revenue by $1.2 million.

A special examination report by Ferguson's office, to be tabled in Parliament Tuesday, found problems with everything from the failure of the board of directors to set a strategic vision for the corporation and demonstrate compliance with its conflict of interest code to management's recruitment, assessment and training of pilots.

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While the Crown corporation is supposed to be self-sufficient, the auditor general's office said one of its "weaknesses" has been its inability to set the right tariffs for its services. Its 2015 tariffs "didn't leave any allowance for unforeseen changes in traffic or expenses."

A surcharge the pilotage authority adopted in March 2016 "is insufficient to cover the corporation's recent operating loss," Ferguson's office wrote.

The highly critical report into the authority is one of the few cases where a Crown corporation has essentially failed a special examination by the auditor general.

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"We have only reported a handful of special examinations where we found that the Crown corporation had not maintained its systems and practices in a manner that provided reasonable assurance that its assets were safeguarded and controlled, its resources were managed economically and efficiently and its operations were carried out effectively," explained Ghislain Desjardins, spokesman for the auditor general's office.

"Therefore, the conclusion of the APA special examination is significant."

Pacific Pilotage Authority performing well

By contrast, the Pacific Pilotage Authority, which performs the same job off the coast of British Columbia, got a positive report card from Ferguson's office, with recommendations for improvement in four areas.

Natasha Gauthier, spokeswoman for Transport Canada, said the Crown corporation has promised to deal with the problems found by Ferguson's office.

"The Atlantic Pilotage Authority has assured the Minister of Transport that it has identified a series of actions in response to the special examination report of the Auditor General and it will report on its implementation in the next corporate plan."

Officials from the auditor general's office and the pilotage authority are to appear before the public accounts committee Tuesday afternoon to answer questions about the report.

Border and vehicle safety examined

The special examination of the pilotage authority is one of several audits and special examinations to be tabled in Parliament Tuesday.

Among them is a comprehensive audit of the Beyond the Border action plan, looking at eight departments to determine how the Canada-U.S. agreement to ease trade and traffic across the border is working.

Passenger vehicle safety will also be in the spotlight, with an audit of how Transport Canada's regulatory framework and oversight is responding to safety risks and issues.

The auditor general's office also looked at how the Canada Revenue Agency handles objections filed by taxpayers and how long it takes it to provide Canadians with decisions on those objections.

Among the other audits to be made public Tuesday are:

• How well Corrections Canada prepares Indigenous offenders for release and reintegration into the community.
• How well the Department of National Defence does at recruiting and retaining members of the Armed Forces.
• How cost-effective DND is at managing maintenance support for military equipment.
• Whether Indigenous and Northern Affairs Canada is handling specific claims from First Nations properly.

CBC.ca's coverage of those audits will begin once Ferguson's report is tabled in the House of Commons Tuesday morning.

Elizabeth Thompson can be reached at elizabeth.thompson@cbc.ca

This story has been updated to clarify the wording of the findings of the AG's office.