en years on, it all seems a very long time ago. But back then, when it was announced that Sheila Fraser would be the new auditor general of Canada, official Ottawa did not know what to make of it. Nice lady, they agreed. But let’s face it: there had never been a woman auditor general. Yes, she was a good accountant, and she had been a partner in one of the country’s big accounting firms. But, frankly, would that disarming schoolmarm manner survive in the meat grinder that is politics and government?

No longer is anyone pondering the survival of Ms. Fraser. She has survived with style, and as she prepares to take her leave of Ottawa next May, the battlefield behind her is a scattering of doubters and naysayers. The suspicion is that the politicians and bureaucrats in Ottawa are still not quite sure what happened to their comfortable little world.

What happened, of course, was that a handful of those bureaucrats and politicians and their friends got caught with their hands in the cookie jar as they swindled the public treasury of millions of dollars, and Sheila Fraser blew her whistle as loudly as she could. It was, she announced to a startled country, quite appalling: “Senior servants broke just about every rule in the book.” And thus was born the sponsorship scandal that will be remembered as the defining, shattering event of Fraser’s decade as auditor general.

In the months that followed, the transgressions that had been spelled out in Fraser’s report to Parliament were spelled out again in a judicial inquiry. And then spelled out yet again in the courts. Some people went to jail, some paid fines, and many more were simply humiliated and embarrassed. The Liberal Party that had appeared destined for a landslide majority in the coming election began instead a long, slow slide from power. Whatever else the skeptics might have wondered, they stopped asking whether Sheila Fraser was tough enough for the job.

he history of Canada’s auditors general is the tale of a continuing struggle for turf. Almost by definition, there will be conflict between the governments that raise and spend the money and, on the other side, the auditors whose job it is to see that in matters of money the government is proper and prudent.

Not surprisingly, the conflict between government and auditors began with one John Lorn McDougall, appointed the first independent auditor general in 1878. He had been a Liberal member of Parliament, and he was a friend of the then prime minister, Alexander Mackenzie, so McDougall seemed at first like a recipe for calm. He made it his job to list meticulously every government transaction, even down to the purchase of bootlaces, and his ponderous annual reports ran to more than 2,000 pages. The surprise was that the previously mild-mannered McDougall turned into an aggressive terrier, asking questions that had never been asked before, scolding, searching out information, demanding tighter controls, eager for anything that might even hint at a transgression, a misspent penny. He was auditor general for twenty-seven years, and he left a legacy of confrontation that in one form or another still prevails.

From McDougall’s day until now, every government has suspected that the auditor general, whoever it might be, wanted to control the government. And the auditors, not surprisingly, thought theirs was a calling much higher than wanting merely to ensure that the books were neat and tidy.

Pierre Trudeau, who did not lose many fights, lost two battles with auditors who wanted more power and influence. The scrappy Maxwell Henderson, who clearly relished political fisticuffs, fought first with John Diefenbaker’s Conservative government, then with the Liberal governments of Lester Pearson and Trudeau. It was finally too much for Trudeau, so his government brought in legislation to restrict the powers of the auditor general and confine him to basic auditing. Henderson would not give up easily. Faced by a government that wanted to clip his wings, he became the hero of a national protest. With considerable embarrassment, the Trudeau government withdrew the legislation. Sonja Sinclair, author of Cordial But Not Cosy, a history of Canada’s auditors general, summed up the Henderson fight: “Right or wrong, any government which tried to take on the man known to millions of taxpayers as a fearless fighter against waste and inefficiency was destined to end up with a bloody nose.”

After one bloody nose, Trudeau was clearly not eager for another. When the smooth and charming James J. Macdonnell was appointed to succeed Henderson in 1974, he seemed a refreshing change. But the new auditor general knew exactly what he wanted, and was prepared to push whatever levers were required to get it, even if that amounted to blackmail. If he did not get what he wanted, he told the Trudeau government, he would quit. What he wanted, it turned out, was a considerably larger staff for the Office of the Auditor General — the OAG, as it has come to be known in Ottawa — and considerably broader powers for himself and his office.

In Macdonnell’s world, there were two kinds of auditors. There were departmental auditors, who did the classic audits of who spent what and for what. Macdonnell would probably have called them bean counters. And then there was the auditor general’s office, where instead of checking arithmetic — departmental auditors could do that — they evaluated whole programs, to ensure that the government was getting value for its money. Program evaluations might seem to be the kind of judgments only elected politicians should make, but Macdonnell insisted that they were the auditor general’s job.

A showdown came when Macdonnell presented his 1976 annual report, which suggested that the government was hovering on the brink of chaos: “I am deeply concerned that Parliament — and indeed the government — has lost, or is close to losing, effective control of the public purse.” The warning was designed to rattle the government and alarm the country, and on both counts it succeeded. In the face of that kind of bluntness, the Trudeau government bought peace by settling the dispute on Macdonnell’s terms and bringing in a new Auditor General Act. Henceforth, the auditor’s office would be run according to Macdonnell’s rules, and those rules defined the modern auditor general’s office.

Sharon Sutherland, a tireless critic of the auditor general system who now views Ottawa from the Centre for Global Studies in Victoria, says that “the impact of J. J. Macdonnell overshadows all his predecessors and successors.” It was under Macdonnell that the concentration of the office shifted from basic financial audits to “management control systems” and “value for money.” As Sutherland has written, “Having had a prominent career as a management consultant himself, and being interested in control as steering activity rather than solely or even primarily as verification of probity, he transformed the Annual Report from comment on financial and economy issues arising from the Office’s examination of public accounts to a compilation of consultancy-type reports on programs and cross-government management functions.”

he sponsorship program was launched to raise the visibility of Canada in Quebec, in the wake of the disastrous 1995 referendum — not a bad thing in itself, perhaps, but shabby once someone figured out that of the $250 million spent on sponsorships $100 million was quietly funnelled into communications firms notable for their friendship with the Liberal Party. Questions about the program had been bubbling for months. It was a departmental audit that first uncovered irregularities, and the government asked the auditor general to have a look. Jean Chrétien stepped down as prime minister so that the impending auditor’s report would fall into the lap of his successor, Paul Martin — a going-away present that was the final blow in their long rivalry.