Auditor general Sheila Fraser recently looked at the Department of Canadian Heritage and its support for Canadian culture, including its funding of Telefilm Canada. Below are excerpts of the report. Lack of a clear mandate for the audiovisual sector and the significance of Telefilm Canada’s activities in television, sound recording, and new media led us to qualify our audit opinion about the financial statements of Telefilm Canada and to make an observation on this matter in our November 2004 Report to Parliament. The government has subsequently resolved this situation, and in March 2005, Parliament broadened the Crown corporation’s mandate to include these activities. Today, in light of this new mandate and the government’s proposals on the governance of Crown corporations, we question whether it is still relevant for Canadian Heritage to maintain the MOUs and contribution agreements with Telefilm Canada in their current form. These MOUs and contribution agreements contain detailed provisions requiring Telefilm Canada to do the following:Prepare separate annual business plans and audited financial statements for programs funded through contribution agreements. Be subject to audits and evaluations by Canadian Heritage. Report on its activities to the Department and to the Canadian Television Fund, a private corporation, in addition to being accountable to Parliament, as its Crown corporation status requires. Telefilm Board autonomy. A board of directors of a Crown corporation is responsible for managing of the corporation’s activities…Some members of the Telefilm Board have expressed concerns about the extent of the oversight that Telefilm Canada is subjected to, which leaves the board with little leeway to interpret its mandate and determine the best way to accomplish it. None of the other eight Crown corporations in the Canadian Heritage portfolio is subject to such a tight degree of oversight and monitoring. Moreover, no other Federal Crown corporation is evaluated and audited in this way by a department. This is a unique situation.  Governance framework of Crown corporations. In our view, the relative importance of the financing provided through contribution agreements and the extent of the oversight they require do not respect the spirit of the governance framework for federal Crown corporations. Normally, the framework provides direct financing from Parliament and allows the corporation considerable autonomy to manage operations. Furthermore, it is difficult to reconcile the extent of this oversight with Parliament’s desire to insulate the creation of Canadian content from political interference by granting increased autonomy to Crown corporations with a cultural mandate, such as Telefilm Canada.  Efficiency of the entities. Finally, this oversight reduces the overall efficiency of Canadian Heritage and Telefilm Canada. On the one hand, the Department has to allocate resources to create monitoring procedures and to analyze the Crown corporation’s operations. On the other hand, Telefilm Canada’s requirements to abide by MOUs and contribution agreements, and to satisfy Canadian Heritage monitoring requirement add to its workload. Recommendation. Canadian Heritage should review and simplify the governance and delivery structure of support programs for the audiovisual industry, including film, television, and new media, in order to respect the mandate and accountability responsibilities of the Department and Telefilm Canada.