1999 Annual Report,
Provincial Auditor: Section 3.02, office of the public guardian
and trustee
Ministry of the
Attorney General
Ms Andromache Karakatsanis, deputy minister
Ms Louise Stratford, acting assistant deputy minister, family
justice services division;
public guardian and trustee
STANDING COMMITTEE ON
PUBLIC ACCOUNTS
Chair /
Président
Mr John Gerretsen (Kingston and the Islands / Kingston et les
îles L)
Vice-Chair / Vice-Président
Mr John C. Cleary (Stormont-Dundas-Charlottenburgh L)
Mr John C. Cleary (Stormont-Dundas-Charlottenburgh L)
Mr John Gerretsen (Kingston and the Islands / Kingston et les
îles L)
Mr John Hastings (Etobicoke North / -Nord PC)
Ms Shelley Martel (Nickel Belt ND)
Mr Bart Maves (Niagara Falls PC)
Mrs Julia Munro (York North / -Nord PC)
Ms Marilyn Mushinski (Scarborough Centre / -Centre PC)
Mr Richard Patten (Ottawa Centre / -Centre L)
Substitutions / Membres remplaçants
Mr Michael Bryant (St Paul's L)
Mr Gerry Martiniuk (Cambridge PC)
Mr Jerry J. Ouellette (Oshawa PC)
Also taking part / Autres participants et
participantes
Mr Richard Patten (Ottawa Centre / -Centre L)
Mr Erik Peters, Provincial Auditor
Clerk pro tem / Greffier par intérim
Mr Douglas Arnott
Staff / Personnel
Mr Ray McLellan, research officer, Research and Information
Services
The committee met at
1032 in room 151, following a closed session.
1999 ANNUAL REPORT, PROVINCIAL AUDITOR
MINISTRY OF THE ATTORNEY GENERAL
Consideration of section 3.02,
office of the public guardian and trustee.
The Chair (Mr John
Gerretsen): Good morning. I wonder if we could get the
hearings started, please. Thank you all very much for attending.
I'd like to call to order the standing committee on public
accounts to deal with section 3.02 of the 1999 annual report of
the Provincial Auditor on the public guardian and trustee. We'll
have an opening statement of approximately 15 to 20 minutes, and
after that I will divide equally between the caucuses the time
between now and 12 o'clock.
Welcome once again to our
hearings, Deputy Attorney General.
Ms Andromache
Karakatsanis: It's my pleasure to be back again before
this committee. I'm Andromache Karakatsanis, the Deputy Attorney
General. With me today is Louise Stratford; she's the Ontario
public guardian and trustee.
I am pleased to return to the
committee to discuss the auditor's report on the office of the
public guardian and trustee and the ministry's response. In our
society we believe that people who are unable to make their own
decisions deserve to have someone to help them. This is the
OPGT's role when there is no one else to act.
Our largest program is
property guardianship. It currently serves about 10,000 people.
Most of the people we serve suffer from mental illness, dementia,
developmental disabilities or head injuries. They come from a
variety of cultural and language backgrounds. Many were the
victims of neglect or abuse before the OPGT became involved.
Often their finances are in disarray, having declined as their
faculties diminished over a period of years.
Just over half of our clients
live in institutional settings, and many receive social
assistance. Some 44% are able to live in the community, and we
work hard to keep them there-often a challenging and difficult
task. Our goal is to see that the people we serve have the best
quality of life possible in their circumstances.
We truly do see ourselves as
the last resort. In situations where a person's incapacity comes
to light, our staff make every effort to find a relative or other
party to become a private guardian. We believe that families
should take responsibility for their loved ones whenever possible
and that such a family connection is in everyone's best interest.
We've had some success with this effort, but in some cases there
simply is no one else. What is especially sad are situations
where there are relatives but they can't or won't come
forward.
The result is that the OPGT
handles the more difficult and complicated cases. While our
caseload has not been increasing in number, it has been
increasing in complexity. Clearly, our face staff face a
demanding job, day in and day out, as they work to meet the
unique needs of the people they serve.
We believe we have been doing
well in what we think of as our social support role. By this I
mean helping people find a place to live, seeing that they get
medical attention or linking them up with community services.
Many a time, one of our staff members has rushed to the scene to
help someone who was being evicted or was found wandering in the
street or was experiencing some other personal crisis. Providing
this sort of direct human support is how our guardianship staff
spend much of their time.
It takes a special kind of
person to do this work effectively. We are proud of the staff of
the office, who bring great sensitivity and compassion to their
efforts to help.
In recent years, we have been
improving our financial management role, another aspect of
guardianship. Problems in this area were the main focus of the
auditor's recommendations. We were aware of, and had already
begun working on, many of the issues the auditor raised. We take
these issues seriously because we understand that quality of life
is affected by how carefully finances and other assets are
managed.
As background for our
discussion, let me outline the mandate of the office more fully.
There are currently 14 programs under the umbrella of the office
of the public guardian and trustee. The OPGT delivers a series of
programs for mentally incapable adults who are without family
support. In addition to property guardianship, which I've
mentioned, these include programs to make substitute decisions
concerning medical treatment, long-term-care admission,
litigation and personal affairs. In about 3,000 cases last year,
for example, the office made vital treatment decisions. This is a relatively
new function, created under legislation in 1995 and 1996. The
auditor concluded that the office had adequate policies and
procedures in place to ensure treatment decisions were
appropriate and supported by the information obtained.
Within the OPGT a special
unit is legally mandated to investigate allegations of abuse,
neglect or financial exploitation. The findings of investigators
can lead to an informal solution or, as a last resort, can
trigger a guardianship application. The auditor indicated that
the OPGT was properly geared up to act on investigation results.
Procedures for receiving documents, setting up new files and
obtaining initial guardianship of property were generally
satisfactory and in compliance with legislative requirements.
A capacity assessment office
provides education, certification and information to independent
health practitioners who specialize in assessing mental capacity,
and a screening program reviews and processes applications when
relatives or others seek private guardianship appointments for
incapable family members.
Other responsibilities
include the administration of property left by dissolved
corporations, maintenance of trust accounts for cemeteries, the
operation of the accountant of the Superior Court, the
administration of the estates of deceased persons and the
monitoring of charities.
The office now has 312
full-time employees-that compares with 269 positions last
year-and a budget of $23.9 million, up $3.5 million from the
1998-99 budget.
The OPGT has made significant
progress since 1995. Since that time, the mandate and
organizational structure of the OPGT were substantially
transformed. The Substitute Decisions Act, the Health Care
Consent Act and a merger with the accountant of the Superior
Court required major structural changes. The office has made
solid progress.
Let me review some of the
service improvements over the past five years. Prior to 1995, the
OPGT was not providing for regular inspection or maintenance of
real estate owned by clients. We now have nine local property
management contracts in place and there are no problems in this
important function.
Prior to 1995, there were
major shortcomings in the way clients' bills were paid. Early in
1999, the office concluded a complete overhaul of the procedures
for handling more than a million payments to more than 7,000
service providers. We are now doing that right. The office used
to have no personal contact with the people it served. The OPGT
is now more accessible. It has six offices across the province
which some clients are able to visit.
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In addition, in the past 12
months, OPGT staff have personally visited more than 4,200 people
in their residences. That represents 48% of our people, almost
double the percentage visited a year earlier. We intend to
continue increasing the number of visits. Prior to 1995, the
average caseload per client representative was 600. Today it's
250. As I will explain, we are reducing average caseload to 150
effective April 1.
As we review the auditor's
recommendations, it is important to be entirely clear about what
the figures regarding errors mean. The figures used by the
Provincial Auditor were based on the review of guardianship files
by an internal auditor on the OPGT staff. The office has had an
extensive internal audit program since 1996.
When we talk about a file
being audited by staff, we aren't referring to a file folder with
some papers in it. A single client's file often consists of
volumes encompassing dozens of activities and hundreds, often
thousands, of entries. Since, in our average caseload, a case is
open for 11 years, a typical file contains information covering
this entire period. Given the 11-year average, errors picked up
by internal audit could have occurred more than a decade ago.
Our internal audit process
scrutinized every activity, procedure and transaction in the
audited file.
In 33% of the files we found
an error had occurred in one or more of the possibly thousands of
transactions entered over the whole period of guardianship. We
are not saying that one third of the transactions were incorrect,
but that one third of the files contained an error. The number of
errors as a proportion of total transactions would be very, very
small. While our goal is to avoid all errors, obviously some have
a more direct impact on the client's daily life than others. Most
of the errors involved a lack of timeliness; that is, we did the
right thing, but it took too long.
Apart from citing overall
statistics, the auditor's report lists a series of specific
examples where clients' assets had not been properly handled. The
office and the ministry, of course, find these cases totally
unacceptable. We were aware of most of them through our internal
audit process and had already begun to take action. In all cases,
the problem has now been examined and resolved. As inexcusable as
these incidents were, I think it would be unfair to leave the
impression that they were typical. They are not. They are the
worst cases.
We have already begun to
reduce the errors. Our last internal audits, conducted over the
first nine months of this fiscal year, reviewed 888 files and
found errors in 22% of the files-still far too high, but a solid
improvement from the 33% in the internal audit two years earlier.
This trend suggests that recent performance has improved and that
what we are finding are mainly old errors. As the initiatives we
have underway gain momentum, we are confident this trend will
continue.
Now let me tell you how we
are changing things. To improve the operations of the OPGT, we
are adding and training staff, balancing and reallocating
workloads, strengthening management, introducing new procedures
and putting more emphasis on technology. We have just completed
the process of hiring an additional 43 staff, enabling us to
increase our front-line guardianship staff by about 35%. A
12-week training program is now underway for these new employees.
Caseloads are being transferred to the new positions on a gradual
basis during February and March. In addition, we plan to provide
training for all existing guardianship staff again in March and
April to put extra focus on the problem areas identified by the
auditor.
A key role of the OPGT is to
investigate when allegations of abuse, neglect or exploitation
are made. We have just hired three more investigators to respond
to the steadily increasing number of cases and to do so more
quickly. All in all, we expect to be fully staffed and operating
under the new organizational structure by April 1. We are
confident that this will provide a foundation for significant
service improvement.
To balance our workload,
match resources with client needs and ultimately provide better
service, we are assigning guardianship files based on the
complexity and the volume of work involved. Cases that are highly
complex and subject to a higher risk of error will be assigned to
senior staff. In this category are cases that involve real
estate, securities, extended health care benefits, legal
problems. Also included are clients who reside independently in
the community and therefore need more time and expertise for
brokering social services. These more intensive caseloads will be
relatively small, averaging 95. Each of these senior staff will
have a clerical staff person assisting with matters such as bill
paying and benefit applications.
On the other hand, clients
with straightforward finances and who reside in protected
settings will be grouped into larger caseloads of 250.
We're also defining caseloads
based on the geographic area or the facility in which clients
live. This will make it easier for staff to maintain closer
relationships with caregivers and to visit in person more
often.
Taken together, the smaller
and larger caseloads will give us an average of 150, compared to
250 at present. This restructuring will bring workloads to
manageable levels so that we can provide better services to all
of our clients. Not only will we give due attention to the
financial management areas identified by the auditor, we will
also strengthen our direct, front-line work with people and
community partners.
As deputy minister, I am
especially concerned that in some cases management apparently did
not follow up when errors were identified through internal audits
or complaints. To rectify this, we have strengthened the
management structure at the office and introduced better
management information systems. We have increased the number of
supervisory positions in programs serving vulnerable people from
eight to 17. The objective is to ensure appropriate monitoring
and follow-up on the progress of people's situations.
In the guardianship area, the
number of supervisors has increased from four to 12, with the
addition of seven team leaders and a manager of quality assurance
and asset control. The team leaders will assist the four existing
managers in supervising casework, tracking correction of errors,
providing day-to-day oversight, training, direction and support
to staff on particular cases. In addition, we are recruiting team
leaders for the investigations and estates program.
To provide feedback to
management we are improving our internal audit and quality
assurance processes. We're recruiting for three more positions in
this area. This is in addition to the new manager of quality
assurance and asset control who will be responsible for producing
regular performance and case management reports.
To support field
investigations to identify and secure clients' assets, a
computerized logging and tracking system is under development. It
will more effectively monitor cases and will be fully implemented
by June 30. The office has also developed computerized reports
that will help to speed up the 7,000 benefit applications and
income redirections that must be processed for people each
year.
Though we've made major
changes in OPGT staffing and management, to sustain the process
of continuous improvement we will rely on information technology,
as almost every public and private sector organization today is
doing.
Last summer, we brought in
consultants to review the computer systems. They completed an
analysis of business processes and recommended a series of
technology enhancements to improve efficiency. As a result, the
office is phasing in new technology, starting with a
user-friendly tool for access to client data. Eventually, in
future, we would acquire a case management system. This will
ultimately automate a large number of transactions, eliminate
duplication of tasks and trigger early identification of
potential errors.
Let me highlight the progress
we've already made by taking action to change process and
procedures.
We've made changes to respond
swiftly and decisively to urgent situations where people need our
help. Each risk investigation is now assigned a priority level
when opened. This ensures that those involving the highest risk
are dealt with first. Progress is reviewed weekly by managers,
and all cases open for 45 days or more are reviewed by senior
management. If an investigation concludes that the OPGT should
act, we move quickly. At present, 90% of guardianship
applications have the necessary legal work begun within our
two-day target, compared with 80% at the end of 1998.
In private guardianship
cases, we are now meeting our target of processing applications
within four weeks 94% of the time. That's up from 40% of the time
during the audit period. Last summer we did a complete audit of
every piece of real estate owned by guardianship clients and gave
staff instructions to act. This audit will be repeated annually
to ensure proper oversight of real estate data.
1050
In the area of estate
administration, the auditor acknowledged the changes made in 1996
and the efforts to locate potential errors for files opened since
then. He suggested, however, that the office should go back into
the earlier files and do a similar review. We are working on this
and have initiated searches which will be complete by the end of March on all estates worth
more than $10,000.
Finally, the auditor also
expressed concern about the notification of minors who become
entitled to collect funds held with the accountant of the
Superior Court. Although there is no legislative requirement to
do so, we have implemented a notification process this month to
improve our customer service.
In closing, let me return to
my opening comment about the challenging nature of the work of
the OPGT. Our staff are dedicated to the well-being of the people
they serve, and by and large they do a good job of helping people
attain the best quality of life possible in their circumstances.
I am confident that with the additional resources and
organizational and other changes I have described, the office
will steadily improve the quality of service to the people it
serves.
The Chair:
Thank you very much. We have approximately 66 minutes left before
the 12 o'clock recess so we'll divide it, 22 minutes for each
caucus, and we'll start the day with the Liberal caucus.
Mr Michael Bryant (St
Paul's): Mr Peters, you've said that the situation in
the office of the public guardian and trustee has gone, over the
course of the last 10 years, from very poor to poor. Can you just
sum up briefly why that is and what's still poor about it?
Mr Erik
Peters: Our main concern at the time was that we did the
audit in 1992, and we found that action was taken only most
recently to really start to improve it. There was a long period
in which action could have been taken but I guess was not. It's
gratifying to see that there is an improvement now in the error
rate in the files. That is good, but the timeliness of
actions-and the other concern was that where the internal audit
had brought matters to their attention, action was not taken. Our
main concern was the timeliness of taking effective action, both
in disposing of assets, opening case files and doing the basic
things.
Mr Bryant:
So it sounds like there's an internal auditor and the internal
auditor is not always listened to. But when you come along they
listen because they know it's going to become public. Is there a
problem there in terms of the auditor playing a "gotcha" role and
internally there's really no effective audit taking place?
Mr Peters:
Well, I hope that we're not playing a "gotcha" role, but we
certainly hope that our report, as it was in this case,
apparently, from what just heard from the deputy, was a catalyst
for action. The concern was that the internal audit also should
be a catalyst for speedy remedial action.
Mr Bryant:
And it has not been to date?
Mr Peters:
At the time when we did the audit we found many cases where they
had bought matters to the attention of senior management and
action was not taken.
Mr Bryant:
Deputy Attorney General, I want to continue with this questioning
about the timing of things. I know that you've hired 43 more
front-line workers and added seven team leaders to the office.
Was that a result of the audit report, or was that a result of
the internal audit?
Ms
Karakatsanis: We had identified a number of areas in
which we needed to make improvements as a result of the internal
audit. That resulted in us looking at better procedures for
providing information to management, but also identified the need
to proceed with not only using our current resources effectively
but identifying the need for additional resources. That was
approved early in 1999. We have been recruiting staff and that
new organizational system will be in place by April 1.
Mr Bryant:
My concern is that the internal auditor doesn't seem to be
listened to, but if the auditor comes along, then in fact you get
action. Are we supposed to believe that it's just a coincidence
that 43 people were hired after the auditor's report?
Ms
Karakatsanis: I'm sorry. The decision to hire the staff
was made prior to the report of the auditor.
Mr Bryant:
So it's just a coincidence.
Ms
Karakatsanis: The internal audit function was created in
1996. As a result of the extensive audit done internally, we were
able to identify problems. In some of those instances, management
did not follow up as promptly as they should. I've indicated our
commitment to ensure that doesn't happen again, with the addition
of supervisory resources and management reports to ensure there
is timely follow-up. These are problems that had been mostly
identified by internal audit, and solutions were being sought at
the time.
Mr Bryant:
Staffing is not the only answer, increasing numbers, of course.
This is probably a case study in that regard. We've had a 100%
increase in staffing since 1992, yet the error rate under the
auditor's report, by the office's own admission, was 33%, which
as I understand it means a 100% increase in staffing but a very
slight decrease in error rate. How do you account for that?
Ms
Karakatsanis: The error rate as found by internal audit,
which was 33% at the end of 1998, has since been reduced as of
the end of 1999 to 22%. In fact, with those existing resources,
we have looked at ways of making more effective use of them.
I've talked about the
increase in supervisory capacity, the reallocation of workload to
reflect the complexity and location of the people we served. I've
perhaps not touched on some of the management reports that were
introduced in 1997-98 and some of the other improvements as well,
and I'd be happy to go into that in some detail.
Mr Bryant:
But a 22% error rate, as you're reporting here, you're not
accepting that? That's not satisfactory.
Ms
Karakatsanis: No.
Mr Bryant:
My understanding is the industry standard is 5%. Is that right,
Mr Peters?
Mr Peters:
According to the ministry, yes,
Mr Bryant:
Right. So again, let me get back to this question. We have, I
guess, now more than a 100% increase in staff resources with the
43 additional people, but the error rate seems stuck at somewhere
between one in three and one in five. How are we going to get it
closer to the industry
standard? Surely just throwing more people at the problem is not
going to do it.
Ms
Karakatsanis: I understand from the auditor that the
industry standard was obtained from ministry staff. We have made
recent inquiries and in fact we are not satisfied that there is
an industry standard from the inquiries that we made with trust
companies.
The error rate has-
Mr Bryant:
Which would mean there's another error, I guess, another error to
add to the 22% rate: the error in terms of reporting as to what
the industry standard is.
Ms
Karakatsanis: As I indicated, our recent information is
that there is no industry error rate standard. The improvement
from 33% at the end of 1998 to 22% at the end of 1999 is a
significant improvement and I believe reflects many of the
improvements that were started during that period of time.
It's important to remember
that the error rate does not reflect the percentage of
transactions that were made in error. Our internal audit system
reviews files that are on average 11 years old and that contain
hundreds and thousands of transactions. If one or more error is
identified, that is identified as an error.
As I indicated earlier, our
goal was to have no errors and we are working toward that goal.
The improvement that we have accomplished even over the last year
is significant, and I believe we've laid the foundations to
improve that even more.
Mr Bryant:
Just so I understand the numbers, Mr Peters, is the 22% number in
terms of the error rate something that's in your report or is
that a subsequent development?
Mr Peters:
The 22% is new. The 33% was in our report; it was identified. But
when we talk about a serious error, we talk about the kind of
errors that we highlight in our report, like a failure to get
income entitlements and stuff like that.
Mr Bryant:
Sure, and I do want to turn to that at some point, but more on
this question. You said, and this has to be true, that a special
kind of person is involved to deal with the issues that come into
your office. If throwing people at the problem is not lowering
the error rate, then perhaps it's a training issue. Is there
anything different being done in the office in terms of training
or education or otherwise that would try to help the people who
work in that office fulfill that role of being that special kind
of person?
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Ms
Karakatsanis: I'll start by repeating that there has
been significant progress in reducing the error rate and that the
error rate does reflect very much a historical picture of cases
that are in many cases 11 years old. I will ask the public
guardian and trustee to detail the extensive training that is
ongoing right now in the program.
Ms Louise
Stratford: We have a very comprehensive training course
for certainly the new staff that we've hired, and the staff that
we have in place already receive regular training programs,
information that's relevant to the work they do, as well as-
Mr Bryant:
I'm sorry. I want to give you an opportunity to address the
specific question, which is, what has happened since the audit in
terms of changes in training? Have there been any changes
whatsoever?
Ms
Stratford: Since we hired the new staff, we have had a
very comprehensive training program. Starting in November of last
year there was a four-week, in-classroom instruction for the new
staff to teach them the basics of the business and to give them
all of the foundation information they would need. All of the
areas that were covered through our own internal audits and by
the Provincial Auditor and identified as difficult issues were
addressed in the training to make sure they were aware of those
problem areas and had the tools to fix them.
There is more training
planned in March and April for the new and existing staff that
will, again, highlight the problem areas, make sure they
understand where they are, where there might be opportunities for
these problems, and to make sure they know how they can resolve
them and how they can meet the timelines that we've set for the
various functions.
Mr Bryant:
So there are new training programs, then?
Ms
Stratford: Yes.
Mr Bryant:
Why weren't they in place before? Why did it take an auditor's
report to start these new training programs?
Ms
Stratford: There has been ongoing training throughout
the course of the program. There is a learning curve, though.
There were a lot of new functions introduced in 1995 and 1996,
and staff take time to become familiar with the new areas of the
mandate and the new procedures that are in place to
operationalize the program. That's why we say that when we're
finding errors in the files now, they tend to be older errors,
and that's how we've been able to reduce the error rate even
without the new staff being on board, because our current staff,
through the training that we provided and through their own
experience, have been able to climb that learning curve and be
much more effective in their performance now. So training is
ongoing all the time and we have, as I say, a specialized
training program for the new staff and to highlight the areas
that we know have been issues for current staff.
Mr Bryant:
Let me get to something I know is particularly troubling that
comes out of this report, and that's the $13 million in assets
belonging to these 1,300 former minors, now over the age of 25.
Deputy Attorney General, is there a legal obligation on your
ministry to contact these people?
Ms
Karakatsanis: There is no legal obligation to contact
these people. We have started a process of notifying those who
come of age who are legally entitled to receive the money and who
may be unaware of the existence of the account. That notification
process was instituted in early February of this year. There is
no legal requirement to do so. We are doing so to provide better
customer service and in response to the issue raised by the
Provincial Auditor.
Mr Bryant: I don't think these
people are customers. I mean, the office is called the office of
the public guardian and trustee. That would suggest to me that
they are trustees. I don't want to get into the minutiae of
fiduciary law, but that would suggest that they are a fiduciary
and that in fact these are beneficiaries. If your office doesn't
have an obligation to notify them, who does?
Ms
Karakatsanis: We have, as I said, instituted a process
to notify them. It is not because we feel we have a legal
obligation to do so, but because we have chosen to do so.
Mr Bryant:
What I'm saying is, why would you not have a legal obligation to
do so if your office is the trustee?
Ms
Karakatsanis: I'm sorry, Mr Bryant. We do not have a
legal obligation to do so, but we feel that it is appropriate to
do so and are now doing so.
Mr Bryant:
Well, how are these people going to find out? If it's your
assumption that in fact you're the public guardian and customer
service office, then how are they going to find out that this
money is there, held, I thought, in trust by your office for
these people? How are they going to find out if your ministry
doesn't take the position that there's an obligation to notify
them?
Ms
Stratford: Generally the minors are aware of the money
because they have a guardian who has been appointed for them, in
the event that it was litigation that led to the payment in, and
the guardian would inform them about the payment. The parents may
be aware and would inform the minors. Generally speaking, there
is someone who knows. Most of the money that we have is claimed
by the minor when the minor turns 18, if they're able to do it,
if there aren't other conditions attached to their ability to
claim the money upon reaching the age of majority.
Our function is to keep the
money safe for the minor and to invest it appropriately so that
there is some return to the minor at the time when they do come
to collect the money.
Mr Bryant:
This is what I don't understand. If there is an obligation to act
in the best interests of the minor-which makes sense; that's what
a trustee should do-surely the obligation carries with it a
notification obligation. Other offices have an obligation to
notify these people. You say some of these people have parents.
You're assuming that the office takes a passive role. What about
these 1,468 people?
Ms
Karakatsanis: Four hundred to 500 notices are being
issued each week, and by the beginning of April all cases will
have received notices. In those cases where we don't have current
address information, we'll obviously have undertaken the search
but it may not yet be completed.
Mr Bryant:
On what basis does the ministry take the position that it has no
active legal obligation as the fiduciary to contact these
minors?
Ms
Karakatsanis: As I've already said, we have taken the
position that we have no legal obligation to notify these minors,
but we are now notifying them.
Mr Bryant:
I'm saying why, though. Why? I've heard you say that you're going
to, but why do you take that position? Why does the ministry say
that they do not have an obligation to notify the minors?
Ms
Karakatsanis: That is our legal assessment of the
obligations involved. We have chosen, nonetheless, to proceed
with-
Mr Bryant:
Could you share that assessment with the committee?
Ms
Karakatsanis: We have chosen to proceed with the
notification. I would just be repeating myself.
Mr Bryant:
So you won't share the assessment with the committee as to why
you do not feel that you have that obligation?
Ms
Karakatsanis: I'm stating what the legal opinion is, Mr
Bryant.
Mr Bryant:
So the answer is no.
Let's get to the delays. We
have a case in which two years elapsed before the office became
aware that a relative of one of the office's clients had
misappropriated more than $100,000. What's now in place to
guarantee that won't happen again?
Ms
Karakatsanis: A number of improvements are in place
since the last audit which we are confident will ensure that
won't happen again. We have more staff. Their caseloads are more
manageable. They have the time to not only follow up on the
personal needs of the people they serve, but they have more time
and more assistance in dealing with the financial and other
issues. We also have more supervisory capacity. I've mentioned
that we've increased in the area of property guardianship from
four to 12 supervisors. We've instituted the new quality
assurance and asset control unit. There are now more management
information systems. In addition, as part of the management
performance system each one of those supervisors will have as a
part of their management performance contract the obligation to
follow through and act on the reports and ensure that timely
action is taken.
All of these efforts in
providing better management information, more supervisory
capacity, better training and more staff will have the effect of
providing us with a better use of resources, more time to focus
on people who need us and the financial transactions.
In addition, we have
doubled our internal audit capacity and we do have, as I
mentioned, new performance management monitoring in place,
including the use of technology and logs, some of which will be
ready by the end of June.
So there are a number of
important systems in place that make me confident that we will be
able to take more timely action and to follow up when errors are
identified.
1110
Mr Bryant:
I know you'd agree as a manager that sometimes to solve the
problem you have to know how on earth it happened. There's one
problem that was highlighted in the auditor's report which I know
you'll be aware of: the failure to sell the house of a client who
had been confined to a nursing home since 1994, despite repeated requests for the sale
of the property from the client's out-of-town children. By early
1999, the house still had not been placed on the market and
$23,000 in taxes had been spent in the interim. How on earth did
that happen?
Ms
Karakatsanis: There are no excuses for the incidents and
cases that were highlighted by the auditor. We are confident,
because of our internal audit capacity, that these are the
extreme examples. They are not typical cases.
The workload realities at
the time meant that when staff were faced with a choice of having
to respond to an urgent personal need-someone is being evicted;
someone needs medical attention; they need to be connected with
some service support in the community-staff would respond to that
direct human need and sometimes let the paperwork go. That's not
acceptable. The measures I've outlined will correct that and
these kinds of cases will not recur.
Mr Bryant:
This particular case is quite a horror story. I'm wondering, in
this particular example, is this an individual who was
responsible for this or was this a result of the systems that
were in place at the time? I understand that there are exceptions
to the rule, but some exceptions are particularly egregious, and
if you had somebody in the ministry who was embezzling millions
of dollars, then you'd have to say, "Here's how it happened." In
this case we're not talking about embezzling millions of dollars,
but we are talking about somebody who was in a nursing home for
five years when she in fact should have had the house put on the
market. Was this an individual person? Or what happened in this
case that would permit this to happen?
Ms
Karakatsanis: I think I outlined some of the systemic
issues and some of the workload pressures. Often there were
different individuals who were involved in cases. As I indicated,
often staff were forced to make choices between dealing with a
direct urgent need and following through on some of the
paperwork. I don't believe there was a particular individual who
was responsible in this case. These are systemic issues that we
have addressed by hiring more staff, by training them, by
changing our processes and procedures, reallocating workload, and
making more effective use of the resources.
The Chair:
Thanks very much; we'll have to leave it at that. Ms Martel.
Ms Shelley Martel
(Nickel Belt): Thank you for joining us this morning. I
want to begin with the issue of minor children who are now 18 who
are owed money, and I want to ask the auditor a question
first.
Erik, is it your view, in
the cases you reviewed, that those minors who had now attained
the age of 18 or older were generally aware that they had money
owed to them?
Mr Peters:
Well, certainly there were T3s mailed out. That part of the
trustee's duty was carried out, so I guess the income tax was
complied with. What we found, though, is that on the T3s that
were returned "address unknown" etc no follow-up action took
place; they were just filed and that was accepted. To the extent
that the T3s were accepted and addressed to somebody, somebody
must have known, because the T3 records income on the assets held
by the individual so that would be therefore known. But to the
best of our knowledge, no action was taken when a T3 was returned
"address unknown."
Ms Martel:
So would it be your view that in order to deal with those,
certainly there had to be more direct intervention on the part of
the office to follow up and to make these clients aware they had
money owing to them?
Mr Peters:
Yes. I'm a little unclear still in my own mind on this point that
there's no legal obligation. I happen to be, on personal matters,
a trustee, and I know that I consider that a very serious
obligation on my part, whether it's legally or not, to ensure
that the people I act in trust for, who happen to be family, are
getting the assets and know of their entitlements. So I'm not
sure of the legality of the issue.
Ms Martel:
Deputy, on that point, are you arguing before this committee that
you feel you have no legal obligation because, in the legislation
that this office operates under, it doesn't clearly state that
there is an obligation? Is that your legal basis for saying you
don't see that you have any kind of responsibility that's a legal
responsibility?
Ms
Karakatsanis: We have a legal opinion from counsel
involved that we don't have a legal obligation to provide this
notification. However, we have made the decision that we will
provide notification, and we are providing notification.
Ms Martel:
Before I get to that, when was the legal opinion obtained by the
ministry with respect to this particular issue?
Ms
Karakatsanis: I don't know when it was initially
obtained. It was certainly reconfirmed at the time of the
audit.
Ms Martel:
I didn't hear your response to Mr Bryant's question, so I would
ask if you'd be prepared to table a copy of that legal opinion
with this committee.
Ms
Karakatsanis: I'm stating the legal opinion that was
provided to the ministry.
Ms Martel:
I understand what you're stating. I'm asking if you would be
prepared to provide a copy to this committee. No?
Ms
Karakatsanis: The actual opinion itself would be subject
to solicitor-client privilege. I am stating the nature of the
opinion.
Ms Martel:
OK. With respect to your saying that you are taking it upon
yourself now to notify these minors who have now passed the age
of 18, I want to get to that process. The auditor completed his
audit in February 1999, essentially, and he has stated that in
his document that we have before us. You are telling this
committee today that in February 2000, a full year later, the
ministry is finally doing what it said it would do in the
auditor's report, which is to take some proactive action in
notifying these clients. Can you explain to this committee why it
has taken a full year before your ministry has finally responded to one of these
concerns of the auditor, which was a major concern?
Ms
Karakatsanis: I indicated a number of initiatives that
have been implemented over the past year. In this particular
area, we are relying on technology changes, and as a result of
the Y2K freezes and the needs to work on Y2K, it wasn't until the
freeze was lifted in February of this year that we were able to
institute the changes and start the notification process.
Ms Martel:
If I might, Deputy, you would have files where you would have T3
slips returned, and that wouldn't require any kind of Y2K or
technology improvements whatsoever to at least start to go back
to those T3s and find proper addresses for people.
I'm finding it hard to
believe that nothing has gone on on this merely because of
technology. There must be other information in the file which
would have allowed you to start to contact some of these people
to find them.
Ms
Karakatsanis: The technology does allow for the most
effective way in which to provide those notices. There is a
project team dealing with the existing account holders. Where
further search is necessary, that search is being undertaken. As
I mentioned earlier, all the notices will be out by April 1, and
all searches are to commence by that date.
Ms Martel:
Maybe I can ask this in another way. What is it about the
technology that is so special that it required a full year of
delay before it was in place to contact these people? What is so
special about what is happening that these people couldn't be
contacted in any other way until now?
Ms
Stratford: The decision was made to embark on a
full-scale notification process last summer. At that time, you're
right, there may have been some indication that in some cases we
didn't have current addresses. But rather than go out piecemeal,
just on the very bare information that we had, we thought it
would be much more efficient and be more fair to everyone if we
could undergo a full program of notification. In order to do
that, we need to be able to tag the accounts where the minors
have turned 18 and track where they are in our systems, look and
see whether they are entitled to a payout at that time, because
sometimes there are other conditions. That required looking at
our technology and making some refinements so that we could get
the reports issued in that way and so we could get that
information. That's what there was a delay in getting.
Ms Martel:
Can you tell us what happens now in terms of this project? You'll
send notification out; you expect that that will be done by
April. What will be the follow-up on the part of your office with
respect to that notification?
1120
Ms
Stratford: It will depend on what the results are.
Obviously, if the address is current, then there's no problem;
the minor will have been notified. If we find that we don't have
a current address, if our notice is returned, we'll have to
embark upon various kinds of searches to try and track down where
that person has gone.
Ms Martel:
What does the notification include? What are you saying to
potential clients?
Ms
Stratford: I don't have a form of it with me, but we're
basically telling them of the existence of the account, the
balance of the account and the paperwork we would need in order
for them to get a payment out.
Ms Martel:
If you have a significant number of people who reply positively,
what will be the effect on your staff resources to then disburse
these assets?
Ms
Stratford: We'll have to see what the volume is, but we
recognize that this is a priority for us and we will ensure that
we put in place the resources to provide a timely kind of
response to any requests that are made.
Ms Martel:
How many staff do you have targeted for this particular
initiative?
Ms
Stratford: We have eight staff who work in the
accountant's office and we have many of them deployed to this
task. I'm not exactly sure how many you might say are exclusively
deployed to it, but there are others in the office in the finance
area whom we can call upon to assist the accountant function, and
we have done so in the past, if there are workload issues
there.
Ms Martel:
How many people are you notifying?
Ms
Stratford: We're sending out about 400 or 500 notices a
week. We have at this point about 5,000 accounts that we are
providing notices on altogether.
The Chair:
I'm sorry, 5,000 accounts in what? I missed that.
Ms
Stratford: Accounts that we have where the minor has
turned 18. That was as of December. As of now we have 6,140
accounts where the minor has turned 18 and we have accounts for
them.
Ms Martel:
What is the total asset worth for those 6,140 accounts?
Ms
Stratford: It is $65 million.
Ms Martel:
That's a lot of money for a lot of people. That is far higher
than anything that was identified in the auditor's report. I'm
having trouble understanding the difference between what the
auditor reported on, which was in the order of $13 million for
about 1,200 clients, and this figure. Have I made a mistake in my
question?
Ms
Stratford: I think the auditor was looking at age 25 and
over at an earlier point in time, and that was that smaller
universe.
Mr Peters:
If I may explain, the 25 seems to be in certain trusts a magic
date, or 21, but sometimes people have left the 25. Many people
have; that's why we took that as the cut-off.
Ms Martel:
In actual fact, for everyone over 18 who would be entitled to
something, or partial entitlements, we're looking at about $65
million.
Ms
Stratford: Right. Some of those may not be entitled.
That's the gross amount of money we have on account for minors
generally. As I said earlier, there may be some conditions
attached to the payoffs. There may be certain things they aren't
able to satisfy and therefore they can't get the money immediately. But that's
the gross amount.
Ms Martel:
If some of those people start to come forward, you will need to
hire some staff to deal with the situation.
Let me follow up on two
other commitments that you gave the auditor to see where those
are as well. The second one had to do with the pre-1996 cases for
locating heirs. The audit showed that in the cases after 1996,
you had contracted with outside firms to locate those heirs, but
virtually nothing had been done on the cases pre-1996. You gave a
commitment to the auditor to undertake a special project to
determine how you could improve on conducting these searches for
the pre-1996 files. Can you tell the committee what's happening
with that special project?
Ms
Stratford: We have a group of files open from 1990 to
1995 where previously we had not undertaken heir searches. There
are about 450 files that are worth over $10,000 in that category,
and for every one of those files we will have initiated an heir
search by the end of March of this year to see if there are heirs
who are entitled to make some claim on those monies.
Ms Martel:
There are 450 files, the value of which is?
Ms
Stratford: Each of which is worth over $10,000.
Ms Martel:
What about the cases where you have a value that is less than
$10,000 but it is a pre-1996 file? What are you doing on
those?
Ms
Stratford: At this stage we haven't planned a similar
kind of initiative, but we are prepared to look at that as the
second phase of our exercise.
We have to consider, in
doing an heir search, whether the cost of the search is going to
make the whole search exercise worthwhile. If it is going to be
an extensive search and a costly one, then of course the value of
the estate is relevant, because the estate would be bearing the
cost of the search. So for a very small estate it may not be
worthwhile to undertake the search. After the search there may be
nothing left of the assets that were in there in the first
place.
Ms Martel:
How do you base the cost to the estate? What is it based on, a
percentage of the entire assets?
Ms
Stratford: We use internal staff to do searches to the
extent that they can. We also have sometimes had to contract with
genealogists if the search is more extensive. We pay them an
hourly rate, which is charged back to the estate.
Ms Martel:
I notice there was a change from a certain percentage of the
estate being requested to an hourly rate. Has that saved money
for heirs or has it cost them more? Do you have a sense of
that?
Ms
Stratford: I think you're referring to heir tracers and
their practice of charging a percentage, which is why we try to
find the heirs ourselves before we actually apply for
administration of the estate, because at that point the heir
tracers become aware of the file, and it is their practice to
charge a percentage, often a very large percentage. In order to
try to protect the inheritance, we try to undertake the search,
as much as possible, internally ourselves or through our own
privately contracted genealogists who charge by the hour instead
of as a percentage. We've found that to be much more
cost-effective.
Ms Martel:
But with respect to the post-1996 files, I understood that you
were contracting with outside firms to locate those. Are you
doing that in all cases, and continuing to do so?
Ms
Stratford: Only where we aren't able to find them
ourselves internally or through our genealogists. An heir search
using heir tracers is really the last resort.
Ms Martel:
For the 450 files that you are looking at now, how many staff are
dedicated to that operation?
Ms
Stratford: I'm sorry; I don't have the exact number. I
can find out.
Ms Martel:
OK. And how many files would be left that are less than $10,000
where there might be no activity ongoing at all, pre-1996
files?
Ms
Stratford: I don't think I have a number for you. I'm
sorry. I can find out.
Ms Martel:
Can you tell the committee, of the 450 files with a value greater
than $10,000 in terms of the estate, what is the total value of
the money that's outstanding for those 450 files?
Ms
Stratford: I just don't know that either at the moment
but can certainly find out.
Ms Martel:
Let me just be clear on where you are in this process. If I
understood you correctly, you have started this process and you
hope that by March you will start to have some initial results.
Is that correct?
Ms
Stratford: Yes. We're planning to have initiated
searches on all the files by the end of March. Then it's a matter
of receiving feedback from where we are in the search to that
extent, and heirs or potential heirs coming forward and their
ability to prove their claim.
Ms Martel:
When did you start this process?
Ms
Stratford: We began the process last October, I
believe.
Ms Martel:
This was another instance where the auditor reported in February
and the ministry had said they would undertake this particular
initiative, and it would seem it was about a six-month delay to
get that underway as well. Was this another technology
problem?
Ms
Stratford: No. We had certainly recognized that there
was a universe of files for which we hadn't undertaken thorough
heir searches. It was a matter of prioritizing work and using the
resources we had according to those priorities. With heir
tracing, you are obviously going to have better results the newer
the estate file. The fresher the history, the easier it is to
locate and identify heirs. So we began with the newer files and
concentrated on those because we thought we would get the best
results from those. It was only after we were able to get that
workload up to a current status that we were able to then go back
and look at the earlier files.
Ms Martel:
I want to back up, because in the auditor's report he made it
clear that since 1996 you were contracting with outside firms and
that work was proceeding. But at the same time, when the auditor
did some work, they
looked at a number of cases that were older than 10 years where
it seemed that nothing had gone on. It was at that point that the
ministry made a commitment to look at the pre-1996 files. As I
understand it, there was at least a six-month delay between the
end of the auditor's work and the ministry's commitment to start
the work on the pre-1996 files and before that work actually
started. I'm not understanding you telling this committee that
you were dealing with some of the other cases; we knew that at
the time the auditor made his report. That was not something new
that was going on in the ministry.
1130
Ms
Karakatsanis: I referred to quite a number of procedures
and processes and management reports and organizational changes
and the recruitment of new staff and training. These are all
initiatives that have been occurring over the last year and two
years. Obviously, we can't do all of those things at once. We
have been doing all of those things over the last number of years
and implementing them as we were able to in the most effective
way possible.
Yes, this was a priority.
It was something that was begun. But we were also working on
implementing other improvements and other changes to the program.
As a whole, there was immediate response in many different
areas.
Ms Martel:
Was it a staffing problem, Deputy, that staff couldn't be
allocated for this particular project?
Ms
Karakatsanis: Throughout last year, the office was
involved in determining how to reorganize, what positions needed
to be recruited, recruiting for those positions, providing
training for those positions, examining the process and
procedures in a number of cases. Risk investigation, for example,
is an area which would receive priority. In that area, there have
been changes made to the process so that investigations and
referrals, as they come in, are prioritized. The higher-risk
cases are acted on immediately.
As the office has looked to
implement many of the changes, it's had to make choices about
which ones needed to be acted on first. As many of the
improvements have been rolled out, they've been done so with
regard to the other changes that were happening as well.
Ms Martel:
There is an issue as well of compensation fees that would be paid
once the heirs are located. The auditor certainly made it clear
that in a number of these cases people would be assessed fairly
significant fees through no fault of their own because there had
been a delay in dealing with these cases. Is the office going to
waive the compensation fees for the pre-1996 files once you start
to process them and track down heirs?
Ms
Stratford: Where we think there's been an undue delay in
dealing with an estate, we do waive our compensation fee. The
various files will have to be assessed to determine whether we
think there was undue delay in those cases. If so, then we would
consider waiving compensation.
Ms Martel:
How do you describe undue delay?
Ms
Stratford: Depending on the circumstances of the file,
it would vary. It would depend on the complexity of the file,
what actions had been taken, what actions were in the hands of
third parties, what kinds of things we had to do to follow up. It
really does depend.
Ms Martel:
Generally, if there was a lack of staff to make this initiative a
priority, and most pre-1996 files were sitting without action,
would that be a case where there was undue delay?
Ms
Stratford: Possibly.
Ms Martel:
You can't tell the committee that right now all of those cases
where virtually nothing was done before 1996 will in fact have
that compensation waived. You're still going to look at it on a
case-by-case basis as you locate the heirs.
Ms
Stratford: That's right.
Ms Martel:
The other project that you gave a commitment to the auditor on
had to do with the distribution of funds once you found someone.
The auditor noted that in many cases at least one third of the
files had delays of more than two years. There were more
excessive delays for other files as well. You said to the auditor
in February that you were going to retain some temporary help to
clear the backlog of the older files. Can you give the committee
an idea of what's happening with that initiative?
Ms
Stratford: We have set up a special project to deal with
those files. We have made some very good progress in complying
with our timelines for distribution. Of the older files that we
had on hand that were ready for distribution, by April we will
have distributed all of those estates. Estates that we have on
hand for further follow-up will have been actioned for
follow-up.
Ms Martel:
Can you tell the committee when this project actually
started?
Ms
Stratford: We introduced a number of procedures in 1998
to make the entire distribution process generally more efficient.
We have improved in our timeliness since that time. We have
recruited some additional estate officers to assist in the
front-line work in distributing estates. At this stage the
backlog project which was commenced last summer is making good
inroads into reducing the backlog, to the point where the estates
that are ready to distribute will be distributed by April.
The Chair:
This will be the last question, Ms Martel.
Ms Martel:
How many estates are we dealing with?
Ms
Stratford: At present there are 43 files that have been
pending for a year or more. Those 43 will be cleared by
April.
The Chair:
Mr Martiniuk.
Mr Gerry Martiniuk
(Cambridge): I'll lead off, followed by Mr Maves and Mrs
Munro.
I'd like to deal with the
notification of minors. I'm curious; is this a new initiative on
the part of the ministry? You've already stated, I believe, that
the legal opinion of the ministry and its solicitors is that
there is no legal obligation, but the ministry has chosen to now
notify minors that money is being held. Is that correct?
Ms
Karakatsanis: That's correct.
Mr Martiniuk: And not only notify
them, but in the event that letters are returned, to attempt to
trace them in order to notify them.
Ms
Karakatsanis: That's correct.
Mr
Martiniuk: Was there a time when that new policy was in
force in the past?
Ms
Stratford: A notification policy?
Mr
Martiniuk: Yes.
Ms
Stratford: No.
Mr
Martiniuk: I see. So for instance, when Ms Martel's
government was in power, from 1990 to 1995, did their ministry
notify minors, as we are doing at the present time?
Ms
Stratford: I'm not aware of any such policy.
Mr
Martiniuk: OK. And when the official opposition was in
power up to 1989, was there a policy of notification at that
time?
Ms
Stratford: I'm not aware of such a policy.
Mr
Martiniuk: Thank you.
The Chair:
A very effective cross-examination.
Mr
Martiniuk: I think I knew the answers.
I would like to deal with
the 1996 internal audit. I'm just curious. I assume that the
internal standards had been created prior to the 1996 internal
audit, or were they created afterwards?
Ms
Stratford: Performance measures were set officially in
1998, in the office. There had been various procedures and
policies that had different timelines recorded in them that we
might consider as rules of thumb and that kind of thing, but
official performance measures were not set until 1998.
Mr
Martiniuk: So the 1996 internal audit could not deal
with them, obviously.
Ms
Stratford: That's correct.
Mr
Martiniuk: Could you elaborate as to the procedure that
was followed in 1998 in determining these performance
standards-the use of other institutions as comparables, their
standards if they were available-and who actually established the
standards?
Ms
Stratford: We did a great deal of consultation to try
and establish the performance standards. However, we did have
difficulty with respect to particular standards for public
trustee offices like ours, because there are no other such
offices in the country that had standards then or that have them
currently. Some are talking with us about developing their own
and hoping to learn from our experience, but we weren't able to
draw upon any precedents from like operations in the country.
So we could only look to
things that were kind of similar operations, social service-type
operations, those kinds of things, to give us some guidelines and
ideas of what we might consider reasonable, talking to
investigators in other kinds of programs to see what might be
reasonable, for example, as an investigation standard, or just
using common sense in some cases to try and determine what might
be a reasonable and adequate standard in the circumstances and
then just going from there.
1140
We did set our standards
quite high. We wanted to be sure that the standards we had set
were things that staff would strive for. We knew that we wouldn't
achieve them all immediately. We set targets that would
incrementally move us more towards the standards we had
ultimately aimed for, but clearly we were looking for a program
of continuous improvement towards those standards.
Mr
Martiniuk: You can help me with some confusion in my
mind, because if there were no direct comparables, therefore the
standards were in effect arbitrary in the sense that they were
unique to this institution. We've heard discussions regarding a
management standard of 5%. Could you explain what that management
standard is, and when you established your standards, did you
have cognizance of the management standard of 5%?
Ms
Karakatsanis: Perhaps I can answer. The 5% was a
reference to a trust industry standard for errors. Recent
inquiries have indicated that trust companies do not have such
standards. They don't measure error rates and they don't have a
standard in place.
From our perspective, our
goal is to have zero errors. That is our goal. What we have done
is set performance measures for the timely action taken on issues
and measure our progress in steadily improving the timeliness of
our actions. Those measures are showing steady improvement.
To take a few examples from
the Provincial Auditor, in terms of client visits, we have now
visited 48% of our clients in the last year, which is double the
year before. In terms of processing private guardianship
applications within the four weeks: At the time of the audit, we
were achieving that standard 40% of the time and now we achieve
it 94% of the time. The initiation of legal proceedings within
two days: There were only two cases this past year where we
didn't meet that two-day standard-one was three days and the
other was seven days.
Performance standards are a
way of measuring progress to our goal. Our ultimate goal is
perfection. That may be unrealistic, but we don't want, and we
don't believe there should be, any errors. I just want to
emphasize that we are the only public guardian-trustee in this
country which has established performance measures and which
measures its progress against those measures. That's a very
important tool of accountability and it's one we believe in.
Mr
Martiniuk: I'd like to key in on errors, because "error"
is a nebulous word. When you're measuring errors, how do you
qualify those errors? We're talking about a quantitative number
of errors, but are all the errors of some severe impact in that
the estate-I'm talking about the money-would be adversely
affected, or are there errors that would not lead to a pecuniary
impact on the estate?
Ms
Karakatsanis: It is a problem with the way we are
measuring errors. All errors are counted as errors, whether they
ultimately have a direct impact on the well-being of a client,
whether they're a delay in a payment or something that has more serious impact. Every
activity, every transaction on files that are an average of 11
years old are scrutinized. If there is one error, then we count
that as a case on which there is an error, and that might be one
error out of hundreds, often thousands, of transactions.
Obviously, the impact of
errors varies. In many cases, the nature of the errors relates to
the timeliness of action taken. In the past, there have been some
extreme examples which we are satisfied we are eliminating. But
we need to look at the way we measure errors to do a better job
of defining those that have a significant impact on the
well-being of the people we serve.
Mr
Martiniuk: One last short question. We've heard that
some standards may have been modified since their inception in
1998. Can you tell me who would do the modification? Is there a
committee, and how often would they meet and consider the
standards in place?
Ms
Stratford: We have a senior management committee in the
office which represents all the business areas in the office. We
meet biweekly and we review those performance measures every
quarter. We have an internal reporting system on the measures
that reports quarterly. At that point we look and see whether the
results we're getting are, first of all, satisfactory, whether
there are some improvements we need to make. But we also look at
the measures themselves to ensure that we're measuring the right
things, to ensure that the things we intended to measure are
being captured by the particular measure we've chosen.
In some cases we have found
that we need to describe it a different way to really capture
what we're after. In some cases we have determined that the
measure is incorrect, that it isn't an appropriate measure, and
now, with the benefit of experience and having heard from the
various managers and their experience talking to the front-line
workers and how it actually works on the ground, we have
determined in some cases that we need to make adjustments. So in
those cases, we make the changes that are needed.
We also have an external
advisory committee, the guardianship advisory committee, which is
composed of external experts and people who work in the area of
the clients we serve and stakeholder group representatives,
people from the college of nurses, people from the OMA, others
who would have interest and experience in the area. Where we have
issues about what our measures should be, we can take them to
that group and ask for their advice as well. As we've said, it's
difficult because there don't seem to be really good comparable
measures available externally, but we're certainly interested in
people's thoughts and feedback on what we do have. So we have a
regular review internally and we have the external potential for
review as well.
Mr Bart Maves
(Niagara Falls): Just a question for clarification off
the start. Deputy Attorney General, how long have you been in
that position?
Ms
Karakatsanis: Just a little over two years.
Mr Maves:
Ms Stratford, how long have you been in your position as the
public guardian and trustee?
Ms
Stratford: About 14 months.
Mr Maves:
The first question I wanted to ask is going back to some of Ms
Martel's questioning, when she was talking about finding people,
heirs and minors. There's one thing that I find interesting: that
there seems to be difficulty in locating people. I wonder what
kind of access to information you have from Revenue Canada, the
Ministry of Transportation, the Ministry of Health and so on and
so forth. I would think that to find an 18-year-old I would
simply call the Ministry of Transportation and ask for the
person's address. It seems that maybe that's not the case.
Ms
Stratford: I don't have the answer for you of exactly
what our procedures are. I'd have to talk to staff and find out
exactly what avenues they pursue. I don't want to mislead you by
guessing, so I will have to find that out.
Mr Maves:
At the Ministry of Community and Social Services we've got
reciprocal agreements with credit bureaus, with Revenue Canada-we
never had them before; we have them now-with the Ministry of
Transportation and so on. I can't imagine, if we have them, that
your office wouldn't also have them, and therefore locating those
people should be easy, I would think. I'm happy to have you
follow up with that, unless you have more on that.
Ms
Karakatsanis: No. Obviously those are areas that we
would pursue. Those sources of information subject to any privacy
concerns are areas that we would look into to assist us in
locating minors or heirs.
Mr Maves:
I can't imagine there being a privacy concern when you're trying
to locate someone and give them money that is their money.
You talked about some of
the cases that the auditor identified and that Mr Bryant talked
about, and you said they are extreme cases. I accept that some of
those cases that have been publicly highlighted were extreme
cases. What I want to know is, did you comprehensively review
these cases after they were brought to light?
Ms
Karakatsanis: All of the cases that were highlighted by
the Provincial Auditor have now been examined and resolved.
Mr Maves:
My next question is a little more difficult for you to answer,
and I apologize for that. What kinds of corrective measures have
you taken? Have there ever been employees dismissed over some of
these cases or is it just, "We're going to retrain them and hope
it never happens again"?
Ms
Karakatsanis: The problems that were outlined were based
on systemic problems in the program-their workload pressures. As
I indicated, where staff had a choice between dealing with often
daily crises and personal needs of clients, those took precedence
to the financial transactions and paperwork that was
required.
1150
The new staff that's being
hired is resulting in a lower caseload, a more manageable
caseload. In addition, we have reorganized the way in which we allocate
caseloads to ensure that it does group together cases by
complexity, by location and by where the people reside in the
institutions.
As part of the overall
accountability of the program for following up on errors, we
have, as I mentioned, new supervisory capacity. It is going to be
in the performance contracts of all the new supervisors, and
existing ones, that there is an obligation to monitor and follow
up. There will be accountability in that way.
Mr Maves:
I appreciate that. I appreciate some of the steps you've been
taking since the auditor came back. I appreciate that you're
bringing in performance measures. I think they're absolutely
necessary.
I take it from your answer
that there hasn't really been any turnover as a result of some of
those cases that were unveiled. It doesn't sound like there's
much.
Ms
Karakatsanis: There actually has been turnover in the
office, but-
Mr Maves:
Well, as a result of those-
Ms
Karakatsanis: No, my understanding is that the problems
were systemic in nature and that there was no individual staff
member who was involved in any one of the particular cases.
That's my understanding.
Mr Maves:
It's hard to understand how no individual employee could have
been involved in any of the cases. Surely some of them had
responsibility for handling some of these cases.
Ms
Karakatsanis: Yes.
Mr Maves:
So obviously there were individual employees. Have any of
them-
Ms
Karakatsanis: Oh, yes. There were individual employees;
I didn't mean to suggest that there weren't. It varies. It's not
always the same employee who deals with any particular case. And
as I said, caseloads were such at the time that staff focused on
the crisis situations, the personal needs, sometimes to the
detriment of their financial needs.
Mr Maves:
Has anybody who may have been identified as having some human
error involved in some of these poorly handled cases-I know
you've got some more management and supervisory positions. Have
any of those people been promoted, to the best of your
knowledge?
Ms
Karakatsanis: I don't know the answer to that
question.
Mr Maves:
OK. The reason I'm asking some of these questions is that my
experience with bureaucracy quite often is that when the
Provincial Auditor will find errors or glaring mistakes over the
years, not just in your department but in many departments, I end
up finding out that the people who were responsible end up
getting promoted. I always think that's somewhat astonishing.
The Provincial Auditor has
said, after he did your review, and I'll quote him from a
newspaper article, "It's not just the numbers"-when we talked
about the new employees-"it's also the kind of people they have
engaged. Are they good trust administrators?"
My question is, when you
went out and hired 43 new people, what were the key
qualifications that you looked for in those people?
Ms
Karakatsanis: The public guardian and trustee will
answer that question directly.
Ms
Stratford: There were a number of skill bases that we
were looking for. We were interested in seeing experience in like
kinds of operations. We were looking for people who had some
education in the area. We were looking for people who had the
ability to communicate, analyze and problem-solve. We were
looking for the ability to work in the various areas that we
have, because the client representatives perform a number of
functions. There is a financial component to the job. There is
also, as you've heard, a social service kind of component to the
job. So we're looking for a unique person who can perform both of
those functions, who can not only deal with the finances but also
have enough of the social skills and the ability to empathize and
to understand our client base so that they could do both sides of
the job, the financial and the social service.
We were looking for a very
unique person and we were able to attract a large number of
applications for the positions and to select people who we think
were uniquely qualified for the work.
But it is a very broad mix
of skills and we were very mindful of the fact that we needed to
hire people who did have the background or the potential to be
the type of client representative that we want to have in place
to serve our clients the very best that we can.
We're quite satisfied that
the candidates we attracted and interviewed did have those
credentials, and we feel the people we ultimately selected do
meet the qualifications that we were looking for for those
positions.
Mr Maves:
Chair, just because I know the auditor was concerned about this,
and I share that concern, I'd like to request at the end of our
proceedings that we request from the office of the guardian and
trustee maybe some copies of resumés of people they actually
hired into those positions. I'm perfectly happy for them to black
out any parts that would identify people. I would like to satisfy
in my mind the auditor's concern about the type of people who
have been engaged to continue on in this.
The Chair:
Is there any problem with respect to that request?
Ms
Karakatsanis: Perhaps we could provide the job
applications and qualifications which are listed in there. Would
that serve to highlight the qualifications we were looking for in
the recruiting?
Mr Maves:
I would like to see if the people who were hired were suited for
it. I don't want to know any names or anything like that; I'm
just curious as to that component.
The Chair:
We can discuss that later.
Mr Maves:
I'm happy to discuss that when we go in camera. That's fine.
The Chair:
That's the 22 minutes, Ms Munro, according to my watch anyway.
It's 12 o'clock now. We'll recess until 1:30, because there are
some more questions that
members have. The hearing stands adjourned until 1:30 this
afternoon. Thank you.
The committee recessed
from 1157 to 1333.
The Chair:
I call the committee to order. We'll start with a new round of
questioning from the official opposition. I'm proposing that we
go in the same rotation as this morning and that we limit the
questions to 20 minutes at this stage. Then we can see what we do
after that.
Mr John C. Cleary
(Stormont-Dundas-Charlottenburgh): I know that we heard
a lot here this morning about new staff and trained staff. I
would just like to know how your number of staff compares to
1990.
Ms
Karakatsanis: I don't have that information. I can tell
you that in 1993-94, there were 207 staff. Last year there were
269 and this year there are 319 funded positions. I don't have
the earlier year that you mentioned.
Mr Cleary:
Could you get that information to us?
Ms
Karakatsanis: Yes. It was for what year?
Mr Cleary:
I want to know how many staff you had in 1990.
Ms
Karakatsanis: OK.
The Chair:
Could you pull the microphone a little closer to you, Deputy,
please?
Ms
Karakatsanis: I'll pull my chair in.
Mr Cleary:
My other question: You said there are 6,140 accounts and there is
$65 million. Where is that money right now?
Ms
Stratford: That's on account with the accountant of the
Superior Court, which is a program that we operate.
Mr Cleary:
You have control of that money right now?
Ms
Stratford: Yes, we do, and we invest it in accordance
with the investment policies that we set in the public guardian
and trustee's office. We set those policies in conjunction with
our investment advisory committee, which is a committee of
external experts who advise us on what kinds of investments would
be prudent for the money that we hold in our various
accounts.
Mr Cleary:
Where does the interest on that money go?
Ms
Stratford: We credit the interest to the accounts of the
people for whom we are holding the money.
Mr Richard Patten
(Ottawa Centre): The auditor should take a look at Air
Ontario. That's twice in two weeks I've been late. I missed your
presentation and the first round of questions, except the last
part of that, so you may have addressed this question. The
auditor's report identifies a high number of negligence claims,
which I presume to mean that those are court challenges or legal
challenges. How numerous are those?
Ms
Stratford: In 1997 there were seven claims; in the 1998
fiscal year there were eight.
Mr Patten:
Were they settled?
Ms
Stratford: They were.
Mr Patten:
If I might just clarify with the auditor, when you say
"negligence claim," that's what we're talking about? These would
be legal proceedings?
Mr Peters:
Yes.
Mr Patten:
There were examples of situations where, because of the handling,
some of the proceedings went awry. I wonder if you have a
protocol or a set of procedures that prioritizes, for example-I
won't identify the specific claim, but there was an instance in
which someone actually had considerable money in a bank account
and yet the guardian's office was proceeding with selling
someone's furniture prior to liquidating any assets in the bank
for tax bills that had come in from the city, and these were
relatively small amounts. Have you addressed that sort of issue?
In other words, what would be your approach in identifying what
you do with assets that may have to address certain
liabilities?
Ms
Karakatsanis: I have addressed some of these issues with
some of the other members of the committee, but I'd be happy to
address your question.
First of all, I would like
to make clear that we take very seriously the issues that were
raised by the auditor. We have implemented some measures that are
already showing improvements and have laid the foundation for
more improvements in this area. We are absolutely committed to
correcting that.
There were at the time
issues around caseload and the amount of supervisory staff who
were available to take corrective action once errors had been
identified. We have improved this by adding 43 new staff to the
office. All of those positions will be filled as of April 1.
There has been recruitment over the past year.
The increase of supervisory
positions in this area of property guardianship is from four who
were in place at the time to 12 now. Many of the procedures and
policies have been reviewed. They are being constantly updated.
There are management reports that highlight when certain actions
should be taken and when it appears that someone is not receiving
the income that they should.
1340
The increase in management
supervisory capacity, increased training, particularly focusing
on the areas identified in the audit, the reallocation of
workload and caseload will help us to have more effective use of
the existing resources as well as to allow us to draw on the
availability of the additional staff.
The caseload has been
reallocated in a such a way that those complex cases where people
have assets, where they're in the community, where there are
legal issues or where there are other factors that make them a
complex case, those are being grouped together with relatively
small caseloads of 95 and given to very senior client
representatives who will be assisted by staff. By being able to
focus and provide smaller caseloads in those areas where there
are assets that need to be tracked and dealt with and where there
is more complexity in the cases, there will be more time for the
client representative to spend on those cases. In addition, they
have now been grouped geographically and by institution, which
allows the staff to be able to visit more frequently and to deal
directly with the caregivers in those institutions.
We have enhanced our
internal audit capacity. We have created a new service: quality
assurance and asset control unit. In the past year there was an
audit of all real estate that is held and detailed instructions
were given. The audit capacity, the quality assurance unit, will
be issuing management reports that indicate where action is
necessary, and it will be part of the performance contract and
the performance expectation of all staff that corrective action
is taken.
Those are just some of the
improvements that we have been implementing, and there are more.
In a couple of areas where we think there is particular risk, and
the risk investigations is a good example, we have revised the
process to ensure that priority is given to those cases that have
higher risk so that they're dealt with first. As well, we have
increased the number of investigators by 30%. There is an
automated tracking system that's being developed and will be
implemented by the end of June. We are the only province that has
performance measures, so we're the only province where the public
guardian-trustee has performance measures.
Mr Patten:
Given your experience-
Ms
Karakatsanis: So we can improve in those measures. If I
can perhaps just point specifically to those examples that were
highlighted in the audit, I can give you some comparisons with
today.
The processing of private
guardianship applications within four weeks: We were meeting that
standard 40% of the time. We now meet it 94% of the time.
Legal proceedings being
reviewed and initiated: We used to meet that within the two days'
period, commencing the work. We used to meet that 80% of the
time. It's now 89% of the time.
The 90-day file review,
which we were only achieving 60% of the time, we are now meeting
82% of the time and, effective April 1, there is an enhanced and
more expanded 90-day file review that is being implemented with
the new staffing structure.
Visits have increased from
25% to 48%: We visited twice as many of the people we cared for
last year than previous years.
So the performance measures
themselves I think indicate substantial improvement in those
areas that were highlighted by the auditor.
I don't want to leave this
without acknowledging the concern we have for the issues that
were raised, and I want to indicate that we are committed to
rectifying them.
Based on our internal
audit-and we have audited many files; in the past year alone, we
have audited fully the 888 files-we're satisfied that those
examples are not typical. They are extreme cases, and we are
committed to ensuring that they don't happen again.
Mr Patten:
OK. I have three very short questions here. Based on your
experience and your review and the establishment of your
performance standards, have you identified a particular set of
procedures-in other words, if you have to liquidate anything to
address liabilities, you deal with cash first rather than
property, that every effort is made to find or concur or discuss
with relatives of the individual concerned any possible-you know,
whatever those procedures are. I'm looking at whether you have a
set of procedures, because some of the mistakes that have
happened in the past have tended to be, "Why would you do this
rather than this when there are assets over here?" that there are
liquid assets, or there are situations of taking many years to
place a house on the market or certain assets etc.
I don't want a long answer.
I'm just wondering, have you established now a particular
approach? I'm assuming that these investigations you have are all
in-house, or do you have some of these sent out to private
consultants to manage?
Ms
Stratford: I'm sorry, the last part I didn't quite hear.
You're asking about investigations?
Mr Patten:
Yes. Are the investigators internal?
Ms
Stratford: Yes, internal. We have investigators on staff
who carry out the investigation.
In answer to the earlier
part of your question, we certainly do have procedures that are
followed in determining how to manage the finances of one of the
people whom we look after. Our mandate is to act in the best
interests of the people we serve. That would include, in the area
of their finances, making sure that the decisions we make make
the most sense in the circumstances. So certainly if there are
assets that can be easily liquidated to meet the client's needs,
we would turn to those assets before we would look at real estate
and other assets, unless it's been determined that the client has
no further need, for example, of real estate.
If there are family members
around who are willing to be involved at least to the point of
consultation, even if they won't be involved in taking care of
the person's finances, then we would consult with them and
certainly consider their views on subjects like what kinds of
assets to liquidate and how to go about managing that person's
finances.
Mr Patten:
You talked about increasing visits and you've somewhat divided up
your caseloads on a regional basis, or however that breaks out.
Is that handled through some of your regional offices? Is this
now a regionalization of the program? Are there actual people
being dispersed to areas or is it being handled by some of your
AG offices in different parts of the province?
Ms
Stratford: We have a number of regional offices. We also
have investigators who are based centrally. So there are some
investigators in the regional offices and they would handle the
investigations in that area. There are client representatives in
every regional office, so the clients in that area would be
served by the client representatives in that area. We also have
treatment decision consultants in each of the regional offices
who serve those clients who require treatment decisions.
Mr Patten:
Before I pass it over to my colleague, I'll be interested to see
whether the increase in personal contact visits etc will be
supportive and helpful in your program. I suspect it will, and
therefore I find it somewhat ironic-and I know this wasn't your
decision, either of you, because you weren't in the office at the
time-that the family support program, which also has a high
degree of necessity for
personalization or personal interface, where possible, with
extremely sensitive circumstances, has been totally centralized
and has taken away the element of some of the regional offices,
which I certainly hear about in my office. That's just a comment.
You may or may not want to react to that.
Ms
Karakatsanis: I'll react to part of it, if I may. In
terms of the social work and the personal support we provide to
many of our property guardianship clients, many of their needs
relate to their day-to-day living decisions, so if they need
emergency medical treatment or if they need new living quarters
or if there is any kind of personal crisis, that's part of what
we do to respond to their needs. About a third of the time of our
client representative is spent on dealing with those direct human
needs of the clients, particularly in those cases where the
clients are in unregulated settings or are in the community.
These are people who are challenged in many ways and who have
special needs, so particularly in those cases we do feel it's
important to visit them.
1350
I have to say that when I
talk about the number of clients that we visited, I'm not
including repeat visits. There are some clients who have very
many visits. We're not including visits by members of the staff
other than the client representative. There are some clients who
are in very regulated settings whose financial affairs are very
simple, where a personal visit is not absolutely essential to the
management of their financial affairs. Other provinces-
The Chair:
You've got four minutes left.
Mr Bryant:
We're willing to concede that point. I'm going to have no time
left unless I go forward.
Ms
Karakatsanis: Just very quickly, other provinces didn't
have similar policies for visiting. They're just slowly now
coming to that.
Mr Bryant:
Excellent. Getting back to this legal obligation, my concern is
this: I understand that you're now notifying minors. The concern
is that the government believes that it is at their discretion,
and previous governments have believed that it was at their
discretion, to notify these people. You have a legal opinion that
supports that. My concern is that the legal opinion is wrong.
I went to the library on my
break. Donovan Waters, who I don't need to tell you is the guru
on trusts, has said, "If there is a discretionary power or trust
to perform," which obviously the public guardian and trustee has,
"that trustee should not only consider whether or how he should
exercise it"-we know that that happens-"but in the first place
inform the potential beneficiary of the beneficiary's interest
and outline the terms of the trust," suggesting that in fact it's
the primary duty to inform and to advise.
The problem is that what we
have with this office is a legislated conflict of interest. I
understand it's permitted. As you know, under trust law, the
trustee can never profit from the beneficiary-can never profit.
But that happens. After 10 years' holding this money, the trustee
gets it back; in this case, the province. The trustee takes a
percentage of the assets that come into the public guardian and
trustee's office in order to administer it.
The appearance-and I'm
talking about the appearance, and appearance is important when it
comes to trust-is that there's a potential for a boondoggle for
the government. If they do nothing for 10 years, they get the
money. So the incentive would be to do nothing for 10 years so
they get the money, because of course it reverts to the trustee
at the end of the 10 years. If, on the other hand, there's an
obligation for them to notify and move forward, then that is
going to remove the appearance of the boondoggle.
Can you tell us now, upon
reflection, what is the legal analysis that refutes the god of
trust, Donovan Waters? Was it a written opinion? Was it an oral
opinion? Why won't you table it with this committee when you know
very well there's no privilege that attaches to a document that
you've already made the subject matter of our conversation.
You've waived privilege already.
Ms
Karakatsanis: I have earlier stated the legal position
of the public guardian and trustee. I also stated that
notwithstanding that, the government has now taken on this
obligation to inform the holders of these accounts once they
reach their age. As you know, the specific opinions are subject
to solicitor-client privilege. That is something that the
government-
Mr Bryant:
You've waived privilege. We're the client. The people of Ontario
are the client. We waived it.
Ms
Karakatsanis: I have stated the position. In any event,
the point here is that we have taken on this obligation to notify
them. We do notify them.
Mr Bryant:
You can take off that obligation too.
Ms
Karakatsanis: In fact, 75% of those who reach the age of
majority and are entitled to receive their money do in fact
access their money, or they're aware of it and choose to leave it
there. The money does not revert to the crown. In the case of an
estate where they have not been claimed for 10 years, that does
revert to the crown, but if the heir ever shows up, the money is
still there.
Mr Bryant:
He shows up, but you have to rely on them to show up. This is my
concern. Was it-
Ms
Karakatsanis: If I could finish-
Mr Bryant:
Mr Martiniuk asked you some pointed questions and I want to ask
you a pointed question. Yes or no, do you have a written opinion
that contradicts what Professor Waters is saying?
Ms
Karakatsanis: I don't want to engage in further debate
about this, Mr Bryant.
Mr Bryant:
Yes or no, do you have it or don't you?
Ms
Karakatsanis: I stated the-
The Chair:
Let her answer, Mr Bryant.
Mr Bryant:
Okay.
Ms
Karakatsanis: I've stated what the position is of
the-
Mr Bryant:
What is your office hiding? Why would you not table this
opinion?
Ms
Karakatsanis: It is clear that we've taken on the
obligation. This is something new that we've agreed to do, to
notify those holders of accounts of the-
Mr Bryant: But if you have no
obligation, then you can withdraw that willy-nilly next year.
That's my concern. It's in your hands. I don't want to leave it
to your discretion.
Ms
Karakatsanis: I've given my answer.
The Chair:
Thank you very much, Mr Bryant. Do you have any final comment,
because the time is up.
Ms
Karakatsanis: I've given my answer.
Mr
Martiniuk: Mr Chair, it might expedite things if we
permit Mr Bryant, with the approval of Ms Martel, to have an
additional few minutes to follow his line of questioning. I'm
willing to give him three or four minutes more.
The Chair:
Does everybody agree that Mr Bryant can have three or four
minutes more? Do I hear any objection? No. Continue then,
please.
Mr Maves:
You're generous.
Mr Bryant:
This is my last kick at the can on this, I understand. That's
what that means.
Three questions. Firstly,
is it the concern of the ministry that if they acknowledge the
legal obligation to notify, pursuant to the law of trusts, that
in turn they will incur some legal liability? In other words,
they will increase their exposure and what it's going to mean is
more lawsuits and not unlike the ones that were the subject of Mr
Patten's questions. Is that the concern?
Ms
Karakatsanis: The ministry responded to the issue that
was raised by the Provincial Auditor. We looked at the issue and
determined that it was appropriate to provide notification to
minors who were eligible to recover their funds. That was the
motivation.
Mr Bryant:
The procedures and protocols when a call comes in or when a case
is being dealt with-there must be a protocol as to what is done
and so on. Are there procedures and protocols that you table so
that we can see what the protocol is? Rather than going through
job descriptions and resumés, we can see what hoops are
jumped through. Is there something in writing on that front?
Ms
Stratford: I'm sorry, on which point?
Mr Bryant:
With respect to an estate when it comes in and documenting a file
and dealing with a file.
The Chair:
Is there a procedural guideline?
Ms
Stratford: There would be procedures, yes. There are
various procedural manuals.
Mr Bryant:
Would you be willing to table those manuals?
Ms
Karakatsanis: I understand there are volumes of manuals
and they are under review. Some of them have been reviewed more
recently than others. We would have to take a look at them and
ensure there was no reason why they shouldn't be tabled.
Mr Bryant:
OK, thank you.
The Chair:
For the record, then, you would be prepared to table them? Just
so that we're clear, either one way or the other.
Ms
Karakatsanis: I think that we would like to take another
look at them before we make the final decision.
The Chair:
You'll let us know, then?
Ms
Karakatsanis: We'll let you know.
Mr Bryant:
Also, there is some issue as to the diverging opinion provided by
your ministry with respect to what the industry standard is in
terms of errors: 5% and then apparently now there's been a change
of heart. I take it that the auditor wouldn't cite an industry
standard unless there was one. There is an industry standard.
Mr Peters:
We are attributing the standard actually to the ministry.
Mr Bryant:
Would you table those diverging opinions so that the committee
can say, "We think that in fact the 5% standard is right or we
think that in fact the 20% standard is right"?
Ms
Karakatsanis: My understanding is that the original
information came from ministry staff who felt that was an
industry standard. We don't have the documentation to
substantiate that. I understand that the Provincial Auditor
didn't do any independent review of what that statement was.
Recently we did informally contact a trust company to determine
what the standard was and how they calculated it. We were advised
at that time that they don't have it. I've told you all we
know.
Mr Bryant:
You're saying that there is no documentation either backing up or
refuting a 5% industry standard?
Ms
Karakatsanis: There was some documentation initially
stating that, I believe.
Mr Bryant:
Would you be willing to table that?
Ms
Karakatsanis: But I don't think there was anything
specific backing it up. Just a second, I'll check. There's
nothing specific that the guardian and trustee has seen that
backs that up.
Mr Bryant:
You don't know?
Ms
Karakatsanis: I don't know.
Mr Bryant:
If there are such documents, perhaps you would be willing to
consider them and table them to the committee?
Ms
Karakatsanis: As I say, I know it was reflected in the
documents, but the backup, any basis for that, we don't believe
there are any documents.
1400
Mr Bryant:
OK. There are no documents.
My last question is to the
auditor. Are you concerned that there is an obligation on the
trustee to inform the beneficiary of the beneficiary's interests,
and it is not being fulfilled by the government? Is that a
concern of yours?
Mr Peters:
I have to be careful how I answer your question, because we're
not lawyers.
Mr Bryant:
Right.
Mr Peters:
We accepted the assertion that there was a legal opinion, and we
wrote in our report that the public guardian and trustee said
they had a legal opinion to that effect.
Mr Bryant:
Did you see it?
Mr Peters:
No, we did not see it. I am concerned about that, quite frankly.
I think we should see it. If we don't see it, the committee
should see it, and if the committee can't see it, I think some
steps have to be taken to ensure that the legal position is correct that
is taken in this particular regard. That was your question. I
have another comment on the 5%.
Mr Bryant:
With respect to the 5%?
Mr Peters:
The 5% comes from documentation of the public guardian. I think
if you look at your records, you will find a document.
Mr Bryant:
We'd better see those documents, then.
Ms
Karakatsanis: I know the assertion was made in an
internal document. I don't believe there was any documentation to
support that assertion.
Mr Peters:
No, not an external-the public guardian and trustee had no
documentation from a trust company to support the facts for
this.
Ms
Karakatsanis: No documentation to support that
assertion. I'm not aware of any documentation that does that.
Mr Bryant:
I understand. But that document in and of itself, have we seen
that or have you seen that?
Mr Peters:
We have seen the document, and the document was actually prepared
in order to make a submission for funding for the public guardian
and trustee.
Mr Bryant:
So it contains some findings and analysis.
Mr Peters:
Not findings and analysis. It contains the assertion of standards
that they would like to achieve and that they have resource
problems achieving.
Mr Bryant:
Do you think it would be helpful for this committee to see that
document?
Mr Peters:
I think it would have to be made available to you by the
ministry, not by us.
Mr Bryant:
OK. Could we have that document?
Ms
Karakatsanis: I'll have to review the document and make
that determination.
Mr Bryant:
OK. Thank you very much.
Ms Martel:
Just to be clear about what we're talking about: Is this the
document that was prepared for estimates purposes?
Ms
Karakatsanis: I believe the document was prepared for
proceeding to obtain further resources internally.
Ms Martel:
So, for estimates, a submission to Management Board?
Ms
Karakatsanis: I believe so.
Ms Martel:
OK. I'm a little confused about why the office would give
information to the auditor with respect to a 5% standard when it
appears there's nothing to back that up. Is that a silly question
to ask?
Ms
Karakatsanis: I'm surprised by that too.
Ms Martel:
OK. Let me go back to the issue about staffing and training, if I
might. In the audit that was done in 1996, which you've
identified was an internal audit, was the issue of staffing
raised in that audit?
Ms
Karakatsanis: The internal audit function began in 1996.
That was an audit of the files, the guardianship files. Those
files, and they are files that go back some 11 years on average,
were reviewed and each and every transaction in those files was
examined by the internal audit. As a result of that, the internal
audit identified some areas where either further actions were
required or where errors had been made. It was as a result of
that information that staff were to take further steps.
Ms Martel:
Deputy, just so I'm clear: There was no specific reference in
that audit with respect to additional human resources being
required to tackle any of the issues you identified in the review
itself?
Ms
Karakatsanis: That internal audit was focused on
auditing the files, and the work that was done on those files and
the various transactions was the focus of the audit. It didn't
deal with resources at the time.
Ms Martel:
When the auditor reported, the report clearly showed that the
ministry itself had identified a need for additional human
resources. Can I ask when that need was identified?
Ms
Karakatsanis: I'm not aware of when precisely that need
was identified. It was identified, and we went through the normal
course, and ultimately government made a decision to provide more
resources. We have been recruiting in the last year to fill
those.
Ms Martel:
I suppose it's the year to recruit that I'm wondering about. The
audit was completed by the auditor in about February 1999, and
the ministry responses may have come in before or after that. But
certainly the ministry response is that staffing requirements
were identified even before this audit was complete, so I'm
having to assume that was sometime in 1998.
If I heard you correctly,
you said you have just hired 43 more staff. I'm not sure if that
was just early in the year 2000 or not, but it seems that there's
about a year-and-a-half, two-year delay from the point of time
where you made it clear in this report that additional resources
were going to be hired and when it seems they are actually being
hired. I'd like to get some more specific responses about when
you started to identify these needs and why it has seemed to take
at least a year and a half to fill some of these positions.
Ms
Karakatsanis: The additional resources were made
available for the fiscal year 1999-2000, so early in 1999 there
was a decision. Those monies were added to the budget. I know
there has been a lengthy and thorough recruitment process as well
as a reorganization of the office, the management structure and
the caseload.
Ms Martel:
Deputy, on the additional resources, can you give me that number
again?
Ms
Karakatsanis: There were 43 additional staff who were
hired.
Ms Martel:
But the additional amount of money that you would have received
in order to do that hiring?
Ms
Karakatsanis: Yes; $3.4 million.
Ms Martel:
Was that request part of a submission through the estimates
process to Management Board to get additional staff? Is that how
that came about?
Ms
Karakatsanis: I'm not sure what the exact form was, but
it was certainly through the process of determining what the
budget would be for 1999-2000 that that decision was made.
Ms Martel:
So even though in 1998 you clearly would have identified a need,
because you've said so, there just weren't the financial resources
flowing from any particular source to allow those people to be
hired.
Ms
Karakatsanis: I didn't say that we identified a need at
any particular time. I said that we went through the process of
doing so and we were given more resources, and that we have moved
to hire and we have hired, and that effective April 1 the new
management structure will be in place.
Ms Martel:
Your reply to the auditor's report said that the staffing needs
had been identified pre-audit, so that would have put us at some
time into 1998-maybe the end, maybe the summer. I'm not sure
which.
You have recruited now 43
more staff. Is that the total combination between your
supervisory staff and your front-line staff, or are those all
front-line workers?
Ms
Karakatsanis: It's 43 more staff in total. The public
guardian and trustee can give you the breakdown.
Ms
Stratford: There are actually others we have recruited,
because in addition to the new positions there were some
positions that we were reallocating in the office to redirect
resources to the areas of highest need. So there were some
vacancies that were moved around to make sure that we were
putting people where they could do the best work.
To the exact figure: We had
43 new positions that were created with additional funding, which
was received in the beginning of the 1999 fiscal year. We had 39
positions that we've recruited for as a result of these
reallocations of staff and reorganization of staff. So there were
actually 39 vacancies that we had available to us already that we
had not filled. So we undertook a recruitment of 82 staff. Yes,
some of those were supervisors. That includes the supervisory
staff as well as the front-line staff.
Ms Martel:
If I'm correct, you've said to us that the front-line
investigative staff-to establish guardianship you've hired three
more there? Do you have the breakdown by-
Ms
Stratford: We have the current group of nine
investigators, including two that do screening. We're adding four
new investigators, one of whom will be the team leader.
1410
Ms Martel:
And your front-line guardianship workers?
Ms
Stratford: We are adding 24 new client representatives
to the current total of 43, to give us 67. We're adding 12 client
representative assistants to the current total of 36, which will
give us 48. In addition, we're adding seven team leaders in the
guardianship area.
Ms Martel:
And the seven team leaders are management staff.
Ms
Stratford: Supervisors.
Ms Martel:
OK. The report said your internal audit capacity doubled, but we
didn't know how many you started with. So what's your total
there?
Ms
Stratford: We're adding one additional internal auditor,
we're adding a manager of the quality assurance area, and we're
adding, I think it is, two assistants.
Ms Martel:
So in your quality assurance unit, what would be your total
staffing capacity? And that's a new unit that has just been
established in the last number of months?
Ms
Stratford: Six.
Ms Martel:
A total of six in that office. Can you just describe for the
committee again your training initiatives? I tried to listen
carefully. I heard both a four-week reference and a 12-week
reference. If you can just provide to us again some information
about what that training process is for the new people you've
brought on, especially for your new employees who are coming on
front-line, because I want to distinguish between front-line and
supervisory to determine if there are different training patterns
or techniques.
Ms
Stratford: We began the training for our new
guardianship front-line staff on November 29, 1999, and the
training program runs right through until April 1 of this
year.
Supervisors are receiving
that training because team leaders also carry a caseload, but
they will in addition be receiving training specific for their
needs-team leadership skills, that kind of thing. There is a
program planned for them as well, and I believe they've already
had one instalment of that.
A component of the training
that started on November 29 is a four-week, formal classroom
training session. That has been completed. We've brought in all
of the new front-line staff in the guardianship area, and we've
provided them with training through workshops and direct
presentations from existing staff, existing managers. Outside
experts were brought in to provide further details in some of the
more complicated areas. Various methods of presenting the
material were employed, so that all of the various learning
methods that adults really benefit from were used.
That was the four-week
session that I was talking about. But ongoing from that is a
range of things. There are special workshops dedicated to
particular functions of the job. There will be job shadowing so
that newer staff can work with more experienced staff and gain
experience just by watching them, seeing how it's done in real
life, and one-on-one training with experienced staff in
particular areas.
We've focused on, as I
said, the full range of activities that would exist in a typical
guardianship case. We have focused particularly on areas that
were raised through our own internal audits and by the Provincial
Auditor as areas of concern, to make sure that the new staff as
well as the existing staff are very clear about what those issues
are and what they need to do to address them. We have more staff
training planned for March and April, which will also focus on
those areas, and we're also training the new investigators and
the estates officers as well.
Ms Martel:
Are all your positions now filled, of the 82 that you were
recruiting for?
Ms
Stratford: By and large. There are always one or two
that may be issues for us, but the recruitment drive, if you
will, has occurred and the people have been hired. Our target has been to have
everyone trained and ready to take on the work by the end of
March. My information is that we are on track with that. There
may be one or two-some of the people who were successful in the
competitions were from the organization internally. They were at
a more junior level and they were able to secure a position of a
more senior type, so then there would be some domino effect as
you go to fill those positions.
Ms Martel:
The $3.4 million that you received beginning in the fiscal year
1999 is in addition to the base budget?
Ms
Stratford: Yes.
Ms Martel:
And what is the final base budget now? Sorry; you may have
mentioned that earlier. I apologize if I missed that.
Ms
Stratford: It's $23.9 million.
Ms Martel:
I'd like to ask just quickly about the fee structure. As I
understand it, fees are made payable by the client for the
services that the office renders, and fees are charged as well
for the administration of the estates. Are the fees in both of
those cases applied as a percentage of the assets that you are
managing?
Ms
Stratford: There are two kinds of fees. There is a
transaction fee which is charged on the transactions, the incomes
and disbursements, and there is an annual care and management fee
that is payable as a percentage of the annual average value of
the assets that are held.
Ms Martel:
When you talk about the transaction fee, how would that be
applied? Are you talking about an individual transaction in a
bank account?
Ms
Stratford: Payments that are received in to the credit
of a client-
Ms Martel:
That would be a pension?
Ms
Stratford: That's right-would be subject to a
transaction fee. Likewise, payments out are subject to a fee.
Ms Martel:
Do you know what is your total, perhaps for 1999-2000? What would
your total have been that would have been collected in fees?
Ms
Stratford: In 1998-99, we collected altogether about $12
million in fees.
The Chair:
Sorry, if I could just ask one question. What would the average
transaction fee be? What are we talking about in dollars and
cents?
Ms
Stratford: The current amount that we charge on
transactions is 2.5%.
The Chair:
That's on both money coming in and money going out?
Ms
Stratford: That's right.
The Chair:
And then on the total estate it would be what, as a management
fee?
Ms
Stratford: It's 0.4 of 1%.
The Chair:
Thank you.
Ms Martel:
Do you have the figures for 1999-2000?
Ms
Stratford: No, I'm sorry.
Ms Martel:
Do those fees go directly to the consolidated revenue fund, or
does the office retain any portion of that?
Ms
Stratford: No, we remit the fees.
Ms Martel:
With respect to the 888 files that you reviewed, you talked about
the 22% error rate, and I guess we can go back and forth about
whether or not those were significant errors. You've talked about
all the changes that you've made in staffing and procedures etc
to deal with that. It would be an annual review that you will do
then to look at some of those files to try and determine if that
error threshold is being reduced? Is that what your plan is?
Ms
Stratford: On all new files we will be doing a review at
the 90-day point-we're already undertaking reviews like that;
we're planning to expand the scope of the review-to go through a
checklist to make sure that we have attended to the proper
details that are required in that file.
Ms Martel:
If I was clear before, all of the files at least have been
reviewed at this point, both new and outstanding files, to go
through all the errors, to make a note of errors?
Ms
Stratford: No, not every single file in the office. The
way we're approaching this is to first review the files that we
are reallocating from the more senior client representatives, the
less complicated files. You'll recall we described how we were
reallocating caseloads so that the senior client representatives
would have the more complicated cases but would have fewer of
them. They will be handing over to the more junior client
representatives the files that are less complicated.
As they hand them over in
batches of about 25, that's part of the training program for the
junior client representatives. They will be required to review
each of those files, checklist in hand, and look for those kinds
of issues that have been identified as things that need to be
watched and need to be ascertained as having been done in the
file.
The files that are being
kept behind by the senior client representatives, the more
complex ones, will also be reviewed. We are looking at a schedule
of review. We haven't quite finalized a target date for
completing the review but we're hoping to undertake that review
at the rate of about one or two a week by the various senior
client reps who are holding those files.
Ms Martel:
Can you tell us how many cases would be in the second category
for review, the cases that are being held by the senior
management?
Ms
Stratford: I'd have to do the math on that; I'm sorry. I
don't know for sure. But we will, of course, be continuing our
internal audit process which, as we said, has a target of 600
internal audits every year. We've exceeded that target this year
and we've done over 800. But we will be able to step up that work
with additional audit strength and those audits will certainly
continue whether or not these files have been reviewed in the way
I've just described.
The Chair:
Mr Peters had a comment before I go to the government side.
Mr Peters:
I just have a quick question. There was reference made frequently
that we used "extreme cases." I just wanted to make sure I
understand the definition of "extreme" in this case, because the cases we
found, many of which were brought to our attention, were either
cases where we found that action was not timely or where we found
that client assets had either been lost or put at risk. Would
that be your definition of "extreme" as well?
Ms
Karakatsanis: Those cases are obviously unacceptable.
They were extreme cases. It's just that, based on the internal
audits that we have done, we are satisfied that those are not
typical cases, that they are extreme cases. Yes, we accept that
the cases that you've highlighted were totally unacceptable.
Mr Peters:
I agree with you on that, but I don't quite agree that they came
out of our regular-these were cases we found in the audit, so I
would not consider them unusual.
Ms
Karakatsanis: Some of them were, and some of them came
from the internal audit as well.
Mr Peters:
That's true.
Mr
Martiniuk: Assuming that we have concluded all
questions, I move that we adjourn to in camera hearings,
Chair.
The Chair:
There is a motion to adjourn at this point in time. Before we
adjourn, and it has nothing to do with the motion as such, I just
want to make the committee aware of the fact that a notice of
motion has been filed by Mr Gravelle, which I understand is the
tradition of this committee, to deal with the matter that we're
dealing with tomorrow, the Ministry of Transportation matter. I
understand that it's a tradition to file a notice of motion the
day before with this committee. He has done that. So just for the
record, there it is.
With that, I'll call the
question. All those in favour of adjournment? Opposed? We're
adjourned.
Thank you very much for
attending today and for attending last week as well with the
members of your staff. We appreciate it.
The committee continued
in closed session at 1423.
