A Summary of the Government of British Columbia s Crown Agency Accountability System March, 2005 Crown Agencies Secretariat Government of British Columbia Contact us at: (250) 952-0760 www.gov.bc.ca/cas/
A Summary of BC s Crown Agency Accountability System The Government of British Columbia s Crown Agency Accountability System (System) incorporates best practices in governance from both the private and public sectors. The System has been designed to ensure that the Government of British Columbia and its Crown Agencies operate in an accountable, transparent and efficient manner that provides the best in services to its citizens. The major features of the System are: Regular Government review of Crown Agencies mandates to ensure that their activities are relevant and appropriate for Government to deliver. The provision of clear policy direction (e.g. Shareholders Letters of Expectations or Memoranda of Understanding) that is publicly available to ensure that Government is accountable for its direction to its Crown Corporations and that Crown Corporation Boards of Directors have the clarity to deliver services that are public priorities. A Board Appointment process that is merit and skills-based, and clear conflict of interest guidelines and disclosure requirements for Directors. Best Practices Guidelines for governing boards of British Columbia Public Sector Organizations consistent with recent corporate governance reforms in the private and public sector. Statutory requirements for Financial and Performance Planning and Reporting for Crown Corporations. Application of Government s accountability legislation to Crown Corporations to ensure Crown Corporations appropriately disclose and report to the public, legislature and Government. BC Reporting Principles endorsed by the legislature, Government and the Auditor General to enhance the transparency, reliability and relevance of information disclosed by Crown Corporations. Auditor General review of Crown Corporation Annual Reports against BC s Reporting Principles. Legislature review of Crown Corporation performance through Select Standing Committees.
BC s Crown Agency Sector There are approximately 200 Crown Agencies in five different classifications: Crown Corporations (i.e. Crown Agencies that are separate legal entities): COMMERCIAL CROWN CORPORATIONS: Revenue generating corporations that obtain fees for goods and services they deliver (e.g. electric power generation and distribution, gaming, liquor distribution, automobile insurance, etc.) SERVICE DELIVERY CORPORATIONS: Taxpayer supported corporations that deliver goods and/or services based on ministry policies (e.g., legal aid, social housing, tourism marketing, capital projects, etc.) SUCH SECTOR ORGANIZATIONS School Districts, Universities, Colleges and Health Authorities. School District Boards are locally elected officials. Other Crown Agencies (that are not separate legal entities): TRIBUNALS Statutory bodies that exercise adjudicative functions independent of Government ADVISORY BOARDS Statutory and Non-statutory boards that provide advisory services to Ministers BC Government Crown Agencies Crown Corporations (Crown Agencies that are separate legal entities) Commercial Crown Corporations Service Delivery Corporations SUCH Sector Organizations Other Crown Agencies (not separate legal entities) Tribunals Advisory Boards Government Reporting Entity
Accountability Mechanisms for Crown Corporations (Commercial Crown Corporations, Service Delivery Corporations and SUCH Sector Organizations) Ministerial Responsibility A Minister Responsible with a related portfolio is responsible to the legislature for the Crown Corporation. This includes responsibility for the enabling statute for the Corporation (if the agency is a statutory Corporation), tabling Crown Corporation documents (such as Service Plans and Annual Reports) in the legislature and responding to any questions in budget estimates debates and question period. Mandate and Policy Direction Government and Crown Corporations enter into Shareholders Letters of Expectation and/or Memorandum of Understanding that are signed by the Minister Responsible, as the representative of Government and the Chair of the Crown Corporation Board, as the representative of the Crown Corporation. These documents stipulate Government s mandate direction to the Crown Corporation and high-level performance expectations, as well as requirements to enable the Crown Corporation to carry out this mandate direction. These documents are all publicly available and posted on Government websites. Ministers Responsible may also issue directive letters to a Crown Corporation to provide specific policy direction to that Corporation. Government may also direct Crown Corporations to comply with broader policy directives with regard to major Government priorities affecting all Crown Corporation (e.g., First Nations negotiation policies, procurement standards, etc.) Creation and Dissolution of Crown Corporations Cabinet approval is required for the creation of Crown Corporations, and Legislative approval is required for statutory Crown Corporations. Dissolution of Crown Corporations must be approved by Cabinet and be consistent with any statutory requirements applicable to the dissolution of that Crown Corporation. Appointment of Board Members Cabinet and/or Ministers Responsible appoint the majority of the members of a Board of a Crown Corporation (except School Boards which are locally elected officials). This is done based on a skills-matrix established to support a merit-based Board appointment process. Treasury Board has approved guidelines for Board remuneration. Board members are also required to sign conflict of interest declarations. Government does not appoint elected Provincial officials to Crown Agency Board. Only in very rare instances are public servants appointed.
Appointment of Chief Executive Officers With the exception of a very small number of statutory Crown Corporations, Crown Corporation Boards of Directors appoint their CEOs. Crown Corporation Boards of Directors must seek the approval of the Minister of Finance for their executive compensation plans, including the remuneration of the CEO. Corporate Governance Government has established best practice corporate governance guidelines for British Columbia Public Sector Organizations to support consistency of board practices with recent advances in corporate governance in the private and public sectors. A Crown Corporation Board of Directors has a fiduciary responsibility for the conduct of the Corporation and an oversight of management. A Crown Corporation Board is accountable for the Service Plan and/or business plans and annual reports of the Crown Corporation. Audit The Auditor General prepares a plan for appointment of auditors of Crown Corporations that is presented to the Public Accounts Committee of the Legislative Assembly for approval. Normally the Auditor General will act as the external auditor for a Crown Corporation for the first three years of a Crown Corporation s existence. The Auditor General may undertake audits and special examinations of Crown Corporations. The Auditor general may work in tandem with the external auditor and a Crown Corporation s audit committee. Financial and Performance Planning and Reporting Crown Corporations, by definition, are all within Government s public accounts the Government Reporting Entity. As such, the Budget Transparency and Accountability Act (BTAA) applies and Crown Corporations must provide their Ministers Responsible with three-year Service Plans and Annual Reports that outline the Crown Corporation s performance objectives and targets (The BTAA allows Government to exempt Crown Corporations from these requirements*). Ministers Responsible table Service Plans annually in the legislature with the Government s budget. Ministers Responsible table Annual Reports with the Government s public accounts. The BTAA requires that the Service Plans of Crown Corporations be consistent with Government s Strategic Plan and Fiscal Plan. The Auditor General has initiated a process of systematically reviewing and assessing a sample of Crown Corporation Annual Reports against the BC Reporting Principles. The BC Reporting Principles are a set of 8 principles developed jointly by Government and the Auditor General, and (*The SUCH sector has been exempted from the BTAA requirement for Service Plans and Annual Reports. SUCH organizations prepare business plans and annual reports based on their established governance practices and requirements. As well, the Service Plans and Annual Reports for the ministries of the Ministers Responsible include consolidated financial and performance information regarding the SUCH sector.)
approved by the Public Accounts Committee. The BC Reporting Principles outline information that should be reported by Crown Corporations (and Ministries) to ensure transparency, reliability and relevance of reporting. The Auditor General s report titled Building Better Reports is presented annually to the Public Accounts Committee. The Select Standing Committee on Crown Corporations reviews the Service Plans and Annual Reports of Crown Corporations and tables a report in the legislature outlining its findings and recommendations from these reviews. The BTAA also requires that all Crown Corporations provide financial reports to the Minister of Finance for inclusion in Government s Fiscal Plan, Quarterly Financial Reports and Public Accounts. Disclosure Crown Corporations are normally subject to Government s disclosure legislation. This includes the Freedom of Information and Protection of Privacy Act, Financial Information Act, And Financial Administration Act. Crown Corporations are also generally subject to the Ombudsman Act. Commercial and Service Delivery Crown Corporations are required to post their Shareholders Letters of Expectation, Service Plans and Annual Reports and annual financial statements and supplier expenditures on their websites. Government maintains a central website through the Crown Agencies Secretariat for Commercial Crown Corporations and Service Delivery Crown Corporations. Ministries related to the SUCH sector include accountability documents for the SUCH sector on their websites. Human Resources and Labour Relations Crown Corporations must comply with the Public Service Employer s Act that outlines requirements for public sector employers, such as severance and overall conditions of employment. Crown Corporations must have their labour relations mandates and executive compensation plans approved by the Minister of Finance. Setting of Rates and Fees Some Crown Corporations are subject to a regulator for rate setting. Crown Corporations may also require Government approval for the establishment of fees. Legislative Oversight Crown Corporations are subject to the oversight of the Select Standing Committees of the Legislature, including the Select Standing Committee on Crown Corporations, the Public Accounts Committee, and/or the Health and Education Select Standing Committees. Select Standing Committees, depending upon their procedures, call Ministers, senior ministry staff and/or Crown Corporation executives to appear as witnesses. The Select Standing Committees on Crown Corporations has the mandate to review Commercial and Service Delivery Crown Corporation Service Plans and Annual Reports.
Tribunals and Advisory Boards Tribunals are created by statute to exercise adjudicative functions independent of Government, but are subject to the financial and many of the administrative accountability mechanisms that apply to ministry branches and programs. Many tribunals also have separate statutory reporting requirements. In addition to their own enabling legislation, many tribunals have additional authorities under the Administrative Tribunals Act. Tribunal reforms are supported by an Administrative Justice Office (AJO). Some of the major accountability mechanisms applicable to Tribunals include: A Minister Responsible is assigned for each Tribunal and, as such, is responsible to the legislature for the Tribunal. This includes responsibility for the enabling statute for the tribunal, tabling tribunal reports (if required) in the legislature and responding to any questions in debate. CREATION AND DISSOLUTION OF TRIBUNALS Cabinet and Legislative approval is required for the creation and dissolution of Tribunals. APPOINTMENT OF BOARD MEMBERS Cabinet and/or the Minister Responsible typically appoint the Tribunal Chair and Board members. A skills-matrix is established to support a merit-based appointment process. Cabinet has approved Board remuneration guidelines that set the remuneration levels and appointment conditions for tribunal members. Advisory Boards are not separate legal structures from Ministries and are subject to the financial and administrative accountability mechanisms that apply to Ministry branches and programs. Any operating requirements for the Advisory Boards are set by the Minister Responsible and are subject to the same governance structure applied to Ministry operations. Statutory Advisory Boards may have additional requirements established in the statute, such as preparation of an annual report.
Crown Agencies Secretariat Government of British Columbia Contact us at: (250) 952-0760 www.gov.bc.ca/cas/