2003 Report of the Auditor General of Canada - November - Chapter 3

3.1 From 1997 until 31 August 2001, the federal government ran the Sponsorship Program in a way that showed little regard for Parliament, the Financial Administration Act, contracting rules and regulations, transparency, and value for money:

* Parliament was not informed of the program's objectives or the results it achieved and was misinformed as to how the program was being managed.
* Those responsible for managing the program broke the government's own rules in the way they selected communications agencies and awarded contracts to them.
* Partnership arrangements between government entities are not unusual in programs of mutual benefit. However, some sponsorship funds were transferred to Crown corporations using unusual methods that appear designed to provide significant commissions to communications agencies, while hiding the source of funds and the true nature of the transactions.
* Documentation was very poor and there was little evidence of analysis to support the expenditure of more than $250 million. Over $100 million of that was paid to communications agencies as production fees and commissions.
* Oversight mechanisms and essential controls at Public Works and Government Services Canada failed to detect, prevent, or report violations.

3.2 Since Communications Canada's creation in September 2001, there have been significant improvements in the program's management, including better documentation and more rigorous enforcement of contract requirements.